Union Budget 2026: Where does the rupee come from and where does it go?
The central government raises its money from a mix of taxes, borrowings, and other receipts, while it is spent on states, interest payments and pensions
 "Union Budget 2026: Where does the rupee come from and where does it go?")
Union Finance Minister Nirmala Sitharaman on Sunday presented the annual Budget for the financial year 2026-27 (FY27), marking her ninth consecutive Budget. The finance minister proposed several schemes to boost the manufacturing and infrastructure sectors to boost domestic production.
According to the Union Budget 2026, here's a look at where the rupee comes from and where it goes to.
Where the rupee comes from
The central government raises its money from a mix of taxes, borrowings, and other receipts. According to the Budget, the biggest share of the rupee in FY27 is set to come from borrowings and other liabilities, which account for 24 per cent of the total, highlighting the government’s continued reliance on market loans and other sources of debt to fund its spending.
Income tax will contribute 21 per cent, which will include collections from securities transaction tax as well. Corporation tax, paid by companies on their profits, is set to add another 18 per cent to the government’s earnings.
Goods and services tax (GST) and other smaller taxes will together make up 15 per cent of the rupee. Non-tax revenue, such as dividends from public sector firms, interest receipts, licence fees, and service charges, will contribute 10 per cent.
Union excise duties, largely collected on petroleum products, are likely to account for 6 per cent, while customs duties on imports and exports will bring in 4 per cent. A small share, 2 per cent, will come from non-debt capital receipts like disinvestment and recovery of loans. Also Read: Budget 2026 highlights: A look at key numbers announced by FM Sitharaman
Where the rupee goes to
On the spending side, a large part of every rupee will be transferred to states or used to meet fixed commitments. The biggest portion, 22 per cent, will go to states as their share of central taxes, as recommended by the Finance Commission.
Interest payments are set to take up 20 per cent of total expenditure, highlighting the cost of past borrowings. Central sector schemes will account for 17 per cent and include programmes fully funded by the Centre, excluding defence capital outlay and major subsidies. Defence spending will form 11 per cent of the rupee and will cover both operational needs and equipment for national security, the document showed. Also Read: Union Budget 2026: What's cheaper, what's costlier for consumers, industry?
Centrally sponsored schemes, which are run by states but funded jointly with the Centre, will account for 8 per cent, while Finance Commission grants and other transfers will add another 7 per cent. Major subsidies on items such as food and fertilisers will take up 6 per cent.
Other expenditures, including administrative and miscellaneous costs, are set to account for 7 per cent, and civil pensions for retired government employees will make up the remaining 2 per cent.