The Union Budget 2026 might not have indicated any direct relief through the restructured tax slabs, but the new reforms and the forecast for the growth of new industries still offer scope of growth for the middle class and small investors through various means.
Income Tax
No new relief has been initiated for the salaried class this year, since the government has opted for policy continuity. The Budget retains the tax regime under which annual income up to Rs 12 lakh will remain tax free. Adding a Rs 75,000 standard deduction, the tax-free income will rise to Rs 12,75,000. There has been no new change in the tax slabs this year.
Tax Rationalisations
The new Budget aims to reduce compliance burdens and customs rates on overseas remittances to ensure relief for the middle class. The focus is also on protecting long-term household savings while improving the overall taxpayer experience.
The new Budget proposes reducing tax collected at source (TCS) on the sale of overseas tour programme packages to 2% from the current 5% and 20%. TCS on the Liberalised Remittance Scheme (LRS) remittance for education and medical purposes will also be cut to 2% from 5%.
Besides, the filing of tax returns will be staggered, while individual taxpayers can continue to file ITR-1 and ITR-2 till July 31. Non-audit businesses and trusts will get time till August 31. The new Budget also proposes taxing all buybacks as capital gains instead of treating those as dividends, to protect minority retail investors.
The interest that was awarded by the Motor Accident Claims Tribunal to individuals will be exempted from income tax, and the TDS applied to this will be removed as well.
Cheaper Products and Drugs
Close to 17 cancer medicines will get cheaper with duty exemption. Besides, duty-free personal imports will be allowed for medicines for seven other rare diseases. The list of cheaper products also includes critical and cost-intensive components used in the manufacturing of microwave ovens, TV equipment, leather goods, and footwear.
The government has increased the capital expenditure outlay to over Rs 12 lakh crore. Besides, allocations have been made for tourism, railway, and tourism sectors, which are expected to create jobs. Beyond that, focus has also been placed on logistics and technology sectors.
