Budget 2026: Top 15 Highlights for HR Professionals & Employees

The Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman, marks a strategic pivot toward “employability” rather than just “employment.”

By prioritizing skill alignment, AI readiness, and a simplified tax regime, the budget sets a clear roadmap for HR leaders and India’s massive workforce.

Union Budget 2026: Income Tax Continuity and Savings

The budget maintains the income tax structure introduced in 2025, offering stability for salaried individuals.

Under the revised New Tax Regime, income up to ₹12 lakh remains effectively tax-free due to the Section 87A rebate.

For employees earning up to ₹12.75 lakh, the ₹75,000 standard deduction ensures zero tax liability.

This continuity allows HR departments to model FY27 salary budgets without accounting for new tax-bracket volatility.

The “Education-to-Employment” Bridge

A standout feature is the establishment of a high-powered standing committee on “Education, Employment, and Enterprise.”

This body is tasked with mapping skill gaps and identifying “labour-absorbing” sub-sectors.

Additionally, the government is focusing on the “Orange Economy” (Animation, Visual Effects, Gaming, and Comics), which is projected to require two million professionals by 2030, supported by new content creator labs in schools.

AI and Deep Tech Integration

The government has explicitly acknowledged the risk of AI-led job displacement.

To counter this, the budget allocates ₹40,000 crore for the Electronics Components Manufacturing Scheme (ECMS) and provides tax holidays for data centers until 2047.

HR professionals are urged to audit “routine cognitive work” roles immediately, as the budget signals that reskilling is no longer optional but an urgent corporate mandate.

Union Budget 2026: Compliance and Social Security

Significant reforms in the New Labour Codes (effective April 1, 2026) take center stage. Key takeaways include:

• Gratuity: Fixed-term employees (FTEs) are now eligible for gratuity after just one year of service, down from five.
• Wage Definition: Basic salary plus DA must now constitute at least 50% of total wages, potentially increasing PF liabilities for employers.
• Gig Worker Welfare: Aggregators must contribute 1-2% of their turnover toward a social security fund for gig and platform workers.

Women and Regional Growth

To boost female workforce participation, the budget proposes establishing at least one girls’ hostel in every district with higher-education STEM institutions.

Furthermore, the development of “University Townships” near industrial corridors aims to keep talent local, reducing migration to metro cities.

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