New Delhi, March 25 – Finance Minister Nirmala Sitharaman stated on Wednesday that the Union Budget includes several "supportive" measures for the middle class and MSMEs, and the government is moving forward with reforms based on conviction and clarity, rather than compulsion.
In response to the debate on the Finance Bill 2026 in the Lok Sabha, Sitharaman said that the fiscal deficit is projected to decrease to 4.3 per cent of GDP in FY27, from 9.3 per cent in FY21, and the country's debt-to-GDP ratio is on a declining path and is lower than most major economies.
The Lok Sabha passed the Finance Bill 2026 through voice vote after incorporating 32 government amendments.
Sitharaman said that the Finance Bill, 2026, is based on five key principles: trust-based tax administration; ease of living for citizens; empowering farmers, MSMEs, and cooperatives; making India a stronger global business hub; and seamless trade facilitation and customs reforms.
Rejecting the opposition's claim that the middle class has been overlooked in the 2026-27 fiscal year, Sitharaman listed measures such as reducing the TCS rate on payments made under the Liberalised Remittance Scheme (LRS) for foreign education and medical treatment. She also mentioned that TCS on overseas tour packages has been reduced from 20 per cent to 2 per cent.
She also said that the Finance Bill provides for exempting customs duty on 17 critical drugs and duty-free import of medicines and personal use.
Besides, to make life easier for taxpayers, the facility to file updated I-T returns has been allowed even where reassessment proceedings have been initiated, and a foreign asset disclosure scheme for small taxpayers has been brought in.
To reduce disputes at airports with customs officers, the Finance Bill provides for rationalizing tariffs on gifts and items brought into India. "Passengers will now have far less to worry about when they land in India," she said, adding that these measures are aimed at facilitating the middle class, passengers, and ordinary citizens, and are not for high-net-worth individuals.
Regarding MSMEs, the government is taking a supportive approach towards MSMEs and moving away from the concept of "penalizing first and then providing relief," to "facilitating first and then enforcing later."
"Individuals or MSMEs have received more facilitative treatment (in the Finance Bill)," Sitharaman said.
Sitharaman said that India is on a path of reform, driven by conviction, clarity, confidence, and commitment, rather than compulsion.
She further stated that a trust-based tax administration is being improved by reducing unnecessary hardship for honest taxpayers.
The government has taken various steps to empower MSMEs, farmers, and cooperatives because they are at the heart of creating employment for production and for the overall development of India, she said.
The Finance Bill aims to support them with numerous measures that improve liquidity but also reduce compliance burden and give them the opportunity to contribute more to the larger economy, she added.
Elaborating further on the Bill, the Finance Minister said that customs reforms have been proposed by altering many provisions with the objective to promote trade facilitation.
Contradicting DMK member Arun Nehru's remarks that GST rate cuts in September 2025 have not worked, Sitharaman said that retail passenger vehicle sales recorded a 26.1 per cent increase, the highest ever for any February. Rural passenger vehicle sales surged by 34 per cent, while urban sales grew by 21 per cent.
The minister said that GST collections reflect this growth in sales with a 6.1 per cent year-on-year increase in December 2025, 6.2 per cent in January 2026, and 8.1 per cent in February 2026, with overall growth of 8.3 per cent in 2025-26.
Tamil Nadu's GST revenues have also risen significantly with 8 per cent growth in December 2025, 5 per cent in January 2026 and a sharp 18 per cent increase in February 2026 (post-SGST settlement).
"These figures clearly show that the GST reduction has boosted demand, strengthened manufacturing in Tamil Nadu and increased revenues for the state," Sitharaman said.
On the opposition charge that the Centre is levying cess, Sitharaman said that the Constitution allows the Centre to levy cess and surcharge and the government is using this provision that is legitimately provided.
"Resources from many cesses are 100 per cent transferred to states," she said, adding that in the last six-year period, 2019-20 to 2024-25, the cumulative utilisation of cesses has exceeded the collection.
As much as Rs 15.14 lakh crore were collected from cess, while Rs 15.97 lakh crore was sent to the states under various schemes. Similarly, health and education cess, Rs 74,000 crore extra has been spent over and above what has been collected under cesses and education health cess.
Between FY15 to FY27, Rs 7.03 lakh crore was collected, while total utilisation stands at Rs. 7.77 lakh crore. "More than what is collected under cesses and surcharges is being spent," she said.
She accused the TMC government in West Bengal of not implementing central schemes and making poor people suffer. She said while the Assam government has implemented the 'Pradhan Mantri Cha Shramik Protsahan Yojana', the West Bengal government has done injustice to 3.79 lakh tea workers by not rolling out the scheme.
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