Is there any change in income tax slabs in the Union Budget 2026-27?

No. Union Budget 2026-27 does not change the existing income tax slabs. The focus is on procedural and structural reforms, not slab revision. For businesses, the key takeaways are: Revised timelines and return processes Rationalisation of TDS and TCS provisions Gradual transition to the new Income Tax Act, 2025, from FY 2026-27

What are the main MSME-related announcements in the Union Budget 2026-27?

The Budget recognises MSMEs as a core growth engine and follows a three-part approach: ₹10,000 crore SME Growth Fund for scale-ready businesses ₹2,000 crore top-up to the Self-Reliant India Fund for micro enterprises Stronger liquidity through TReDS, CGTMSE-backed guarantees, and faster payments In addition, Corporate Mitras are proposed to provide affordable professional compliance support.

What tax holiday has been announced for foreign cloud service providers in Budget 2026-27?

Under Budget 2026-27, foreign companies do not have to pay tax on income from cloud services delivered through data centres in India until 2047. This tax break does not apply to other types of foreign businesses.

Who qualifies for tax exemption as a non-resident expert under this Budget provision?

A non-resident expert can get a tax exemption if they live in India for over five years in a row and their stay is for work under a scheme announced by the Central Government. They must also meet all compliance rules.

What relief has been provided from the Minimum Alternative Tax (MAT) for non-residents?

Budget 2026-27 removes MAT for non-residents who are taxed under the presumptive taxation scheme. This change helps avoid double taxation and makes compliance easier for those who qualify.

What is the ₹10,000 crore SME Growth Fund and how can MSMEs benefit?

The ₹10,000 crore SME Growth Fund aims to create “Champion SMEs”. It is designed to provide equity and risk capital, not just loans, to growth-ready businesses. MSMEs that are likely to benefit most are those with: Clean and transparent books Consistent GST and tax compliance Investments in technology, exports, or formal operations

How does the Budget improve liquidity and faster payments for MSMEs through TReDS?

The Budget highlights that over ₹7 lakh crore has already flowed to MSMEs through TReDS. To strengthen this further, four key steps are proposed: Mandatory TReDS usage for MSME purchases by CPSEs CGTMSE-backed credit guarantees for invoice discounting Linking GeM orders with TReDS for better lender visibility Treating TReDS receivables as asset-backed securities to enable a secondary market

What is the role of “Corporate Mitras” announced in the Budget for MSMEs?

Corporate Mitras are proposed as trained para-professionals who will support MSMEs with: Accounting and bookkeeping Legal and regulatory compliance Routine filings and documentation Developed in partnership with ICAI, ICSI, and ICMAI, they are expected to operate mainly in tier 2 and tier 3 cities, offering support at a much lower cost than traditional advisory models.

What does the scheme for reviving 200 legacy industrial clusters mean for MSMEs?

The Budget proposes reviving 200 legacy industrial clusters to improve competitiveness and efficiency. For MSMEs located in these clusters, this can mean: Better infrastructure and utilities Shared testing and common facilities Improved logistics and technology access

Are there sector-specific Budget measures that can benefit MSME manufacturers?

Yes. Several sector-focused initiatives were announced, including: An integrated programme for the textile sector, covering fibre, clusters, handloom, sustainability, and skills New mega textile parks A container manufacturing scheme A dedicated sports goods initiative

How does the Budget support micro enterprises and very small businesses?

Apart from the SME Growth Fund, the Budget adds ₹2,000 crore to the Self-Reliant India Fund to continue risk capital support for micro enterprises. It also strengthens: Revival of legacy clusters Self Help Entrepreneur (SHE) Marts, which create community-owned retail outlets

What should an MSME practically do after this Budget to be ready for new schemes and credit?

MSMEs should focus on preparation, not announcements. Key steps include: Cleaning and formalising the books of accounts Ensuring correct GST invoicing and reconciliations Maintaining clear debtor ageing and bank reconciliation Discussing TReDS, CGTMSE facilities, and cluster schemes with CAs or bankers

How can BUSY help MSMEs take advantage of Union Budget 2026-27 announcements?

BUSY can act as the operational foundation for Budget-linked compliance and growth. Using BUSY, MSMEs can: Issue GST-ready invoices and track receivables for TReDS Maintain inventory records for sector-linked schemes Keep TDS and tax data aligned with the new Income Tax Act Generate reports required by CAs, banks, and funding institutions

Union Budget 2026-27 Highlights for MSMEs: Key Takeaways

Updated Upd Feb 4, 2026

Published Pub Feb 3, 2026

12 min

By Jagdish Prasad

The Union Budget 2026-27 shapes how India’s small businesses will operate, comply with rules, and grow in the coming financial year. For MSMEs, the Budget is more than a policy document. It decides how easily cash flows through the business, how complex compliance becomes, and which sectors see fresh opportunities.

The Union Budget 2026-27 was presented on Sunday, 1 February 2026, with a focus on growth through infrastructure, formalisation, faster payments, and support for sectors such as manufacturing, textiles, logistics, tourism, and exports.

This article summarises the major announcements related to MSMEs, how different sectors are affected, what compliance changes to expect, and what business owners can do to get ready for FY 2026-27

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Quick Overview: What the Union Budget 2026-27 Means for MSMEs

Overall, Budget 2026-27 keeps the government’s focus on growth with discipline. Spending on infrastructure and manufacturing stays strong, and keeping finances in check is still important. There are no changes to income tax slabs, which helps businesses plan with more certainty.

For MSMEs, the message is clear. The government supports businesses that are formal, ready to grow, and focused on the long term, instead of giving short-term relief. Steps like the ₹10,000 crore SME Growth Fund, more use of TReDS, CGTMSE-backed loans, and help from Corporate Mitras are meant to help MSMEs with good records and proper processes.

Budget 2026-27 Key MSME Announcements at a Glance

SME Growth Fund for Expansion-Stage MSMEs

The Budget introduces a ₹10,000 crore SME Growth Fund to support MSMEs ready to expand. Instead of traditional loans, this fund provides equity and risk capital, so businesses can grow without repaying right away.

Additional Support for Micro Enterprises

A ₹2,000 crore addition to the Self-Reliant India Fund will keep supporting micro enterprises. This aims to help the smallest businesses, which often find it hard to get formal funding.

Faster Payments Through Mandatory TReDS Adoption

To tackle delayed payments, the Budget pushes for more use of TReDS, especially for purchases by central public sector companies. This should help MSMEs supplying to big buyers get a more predictable cash flow.

CGTMSE Backing for Receivable Financing

The Budget suggests using CGTMSE-backed guarantees for invoice discounting. This reduces lenders' risk and helps MSMEs convert approved invoices into working capital more easily.

Revival of Legacy MSME Clusters

A new scheme will revive 200 old industrial clusters. The goal is to improve infrastructure, expand access to technology, and provide shared facilities, so MSMEs can lower costs and compete more effectively.

Affordable Compliance Support Through Corporate Mitras

Corporate Mitras will be trained professionals who help MSMEs with accounting, legal, and compliance tasks , especially in smaller cities.

Equity Support for MSMEs: SME Growth Fund and Self-Reliant Fund

The Self-Reliant India Fund top-up also continues to provide risk capital to microenterprises. MSMEs with clear records, regular GST and tax filings, and steady operations will have a better chance of benefiting when more details emerge.

Liquidity and Faster Payments: TReDS, GeM and CGTMSE Push

Delayed payments are still a major problem for MSMEs. Budget 2026-27 aims to fix this by building a better payment system.

Linking GeM with TReDS lets financiers view confirmed government orders. CGTMSE-backed guarantees help with invoice discounting, and treating TReDS receivables as financial assets could create a secondary market in the future.

For MSMEs, this means easier access to short-term funds through approved invoices, provided their paperwork and invoicing are accurate.

Compliance and Direct Tax Changes That Affect MSMEs

For direct taxes, the Budget gets businesses ready for the new Income Tax Act, 2025, which starts in FY 2026-27. The aim is to use simpler language, set clearer deadlines, and make processes smoother.

For MSMEs, the main points are longer deadlines for some non-audit taxpayers, more options to file revised returns , and simpler TDS and TCS rules. Tax rates remain the same, but there is a higher expectation for clean, consistent data.

GST and Indirect Tax Direction in Budget 2026-27

Budget 2026-27 does not change GST rates . Instead, it focuses on making the GST system work better.

Key areas include faster refunds, better appeal processes, and more use of technology for returns and risk checks. For MSMEs, rates stay stable, but it’s more important to have accurate data, file on time, and reconcile regularly.

Sector-Wise Opportunities for MSMEs After Budget 2026-27 H2

Manufacturing and Industrial MSMEs

Manufacturing MSMEs gain from ongoing infrastructure spending, better logistics, and new schemes for sectors like chemicals, capital goods, and containers. Those supplying parts or services to bigger manufacturers may find new business opportunities.

Textile and Apparel MSMEs

The new textile programme, cluster upgrades, and textile parks open up chances for textile and apparel MSMEs. Shared facilities and export support can help small businesses improve and compete.

Logistics and Transport MSMEs

Logistics and transport MSMEs benefit from more infrastructure and efforts to cut logistics costs. Wider use of TReDS can also help transport contractors get paid faster when working with big buyers or the government.

Tourism, Sports and Experience-Based MSMEs

The Budget’s focus on tourism, culture, and sports creates new chances for MSMEs in hospitality, travel, sports goods, and local experiences. Having clear billing and being ready for digital processes will help businesses capitalise on this demand.

Rural, Agro-Linked and Micro Enterprises

Schemes for agriculture value chains, cluster revival, and SHE Marts help rural and micro businesses. Those who set up basic operations and banking links will be in a better position to benefit.

Professional and Digital Support for MSMEs: Corporate Mitras

Corporate Mitras are meant to connect MSMEs with professional services. Trained with help from ICAI, ICSI, and ICMAI, they will assist businesses with everyday accounting, compliance, and paperwork at lower costs.

This is especially helpful for MSMEs in smaller cities that now rely on informal or last-minute help with compliance.

Budget 2026-27 Action Checklist

MSMEs don’t have to wait for new schemes. They can start preparing now by:

Reviewing receivables and identifying chronic payment delays
Exploring TReDS options with banks or advisors
Aligning income tax and GST calendars for FY 2026-27
Cleaning up GST data and completing reconciliations
Keeping basic financial reports ready for loans or funding

Taking these steps will make your business more stable, no matter which schemes you qualify for.

Download Union Budget 2026-27 PDF and Official Documents

MSME owners who want more details should check the Budget Speech PDF, official highlights, and the Finance Bill. These documents explain what the Budget aims to do, its scope, and when changes will happen.

As compliance and formalisation become increasingly important, reliable systems are a must. BUSY helps MSMEs manage GST, invoicing, TDS, inventory, and cash flow all in one place.

Conclusion:

Union Budget 2026-27 is not focused on quick fixes. It aims to build disciplined, formal, and scalable MSMEs. Businesses that improve their systems, keep clean records, and make the most of sector opportunities will benefit most.

For MSMEs, the main point is clear: preparation and compliance are now essential parts of growing your business.