Budget 2026-2027: the full picture, sector by sector
Rs 266.7bn of spending, a 3.7% deficit target, new taxes, a pension U-turn and hundreds of measures. What the Budget says, how it compares with last year's promises, and who is affected in every sector.
In short
Presented on 19 June 2026 and enacted by the Finance Act on 2 August, the Budget plans Rs 266.7bn of spending (31.6% of GDP) and Rs 235.5bn of revenue, for a deficit of Rs 31.2bn: 3.7% of GDP.
Last year's target was missed: the 2025-26 deficit was 6.0%, not 4.9%; growth was about 3.1% instead of 3.7%; the expected Rs 10bn of Chagos receipts did not arrive. This year again counts on Chagos money, without it, the deficit would be 4.95% (EY).
Revenue rises 16%: corporate tax +20%, a new 35% income-tax band above Rs 12m, higher excise on alcohol, tobacco, sugar and plastic, a 5% insurance premium tax.
Spending shifts towards health (+45%), housing (+62%), public order (+12%) and capital projects (+34%): the port, the M4, water and the airport.
The headline pension reform lost its means test within three days; the State Age Pension still starts on 1 January 2027 with a flexible age of 60 to 70.