The correct answer is option 2: Allocation in the defense sector is kept unchanged at around 5% of GDP. This statement is not correct. In the Union Budget of India for the year 2015-2016, the allocation in the defense sector was actually increased by 11.6% to INR 2.46 trillion. This increase was aimed at modernizing the armed forces and enhancing their capabilities.
Option 1 states that the India Financial Code will be introduced soon in the Parliament, which is correct. The India Financial Code aims to bring together various financial laws and provide a comprehensive regulatory framework.
Option 3 states that a Student Financial Aid Authority will be instituted, which is correct. The government has proposed to set up this authority to streamline and improve the process of providing financial aid to students.
Option 4 states that there is no change in the rate of personal income tax, which is also correct. The budget did not announce any changes in the personal income tax rates for the year 2015-2016.
In conclusion, the only incorrect statement is option 2, as the allocation in the defense sector was increased in the Union Budget of India for the year 2015-2016.