Finance Minister Nirmala Sitharaman presented the Budget 2026 today in Parliament. The total budget size is pegged at Rs 53.5 lakh crore. But have you ever wondered where this money comes from and how exactly it is spent by the government?
Here is a step-by-step breakdown of how the government gets money for the budget and how it is spent.
Where does money come from?
The largest portion of the money for the budget comes from income tax, corporate tax, borrowings and GST and other related taxes.
The income tax accounts for about 21 per cent of the 2026 budget. According to estimates, the government will collect Rs 14.66 lakh crore in income tax in FY26-27.
From corporate tax, the government is estimated to get Rs 12.31 lakh crore in FY26-27. The corporate tax forms about 18 per cent of the total budget.
Goods and services tax forms about 10 per cent of the total budget, generating Rs 10.19 lakh crore. In total, the government is expected to collect Rs 44.04 lakh crore from direct and indirect taxes.
Borrowing and liabilities are the largest contributors to the Budget 2026. The portion accounts for 24 per cent of the total budget and is projected to reach Rs 16.95 lakh crore in FY26-27.
Among the borrowings and liabilities, market borrowings account for Rs 11.73 lakh crore, securities account for 3.8 lakh crore, and external borrowings amount to Rs 15,385 crore.
Where does money go?
The largest amount of budget money goes to interest payments, about 20 per cent of budget outlay, Rs 14.03 lakh crore, goes to interest payments by the government.
The central sector schemes, which are estimated to cost Rs 17.72 lakh crore in FY26-27, make 17 per cent of the budget. There are about 145 central sector schemes. Additionally, there are about 46 centrally sponsored schemes which are expected to cost Rs 5.49 lakh crore.
In total, the total scheme expenditure is estimated to be at Rs 23.21 lakh crore, 25 per cent of the budget outlay.
Among the other major sectors, the defence sector is allocated 11 per cent of the budget and pensions expenses are expected to be at Rs 2.96 lakh crore.
Furthermore, agriculture, education and healthcare expenditure are estimated to cost Rs 1.62 lakh crore, Rs 1.39 lakh crore and Rs 1.04 lakh crore, respectively.