The Union Budget 2026–27 has rolled out a set of targeted measures aimed at easing financial pressure on the middle class, with a focus on tax simplification, lower compliance burden, reduced healthcare costs and increased investment in education and skills. While the government has avoided broad-based tax rate cuts, it has opted for structural changes that directly affect household spending, overseas remittances and everyday financial management.
At the core of the Budget is an effort to improve ease of living by reducing friction in the tax system and trimming indirect costs borne by salaried individuals, students and families.
Tax relief and simpler compliance
A key relief comes from a sharp reduction in Tax Collection at Source on overseas spending. The TCS rate on international tour packages has been lowered to a flat 2%, replacing the earlier slabs of 5% and 20%. Remittances sent abroad under the Liberalised Remittance Scheme for education and medical purposes will also now attract a reduced 2% TCS, down from 5%, easing cash-flow pressures for families supporting overseas studies or treatment.
The Budget also provides relief to accident victims by exempting interest awarded by Motor Accident Claims Tribunals from income tax and removing the requirement for tax deduction at source on such interest.
On compliance, the introduction of the Income Tax Act, 2025, effective April 1, 2026, marks a shift towards simplified provisions and redesigned return forms, with the objective of enabling taxpayers to file returns without professional assistance. The deadline for filing revised or belated returns has been extended to March 31, while due dates for non-audit business cases and trusts have been pushed to August 31.
Lower personal costs and social sector support
Healthcare expenses are set to come down with customs duty exemptions on 17 cancer drugs and additional medicines used to treat rare diseases. For international travellers, customs duty on dutiable personal imports has been reduced from 20% to 10%, and baggage rules are being updated to provide clearer and more generous duty-free allowances.
Household energy costs are another focus area, with an allocation of Rs 22,000 crore to the PM Surya Ghar Muft Bijli Yojana, aimed at promoting rooftop solar adoption and lowering electricity bills.
Education and skill development also feature prominently. The Budget proposes setting up one girls’ hostel in every district for students pursuing higher education in STEM institutions, improving access and safety. In addition, the government plans to train 1.5 lakh multiskilled caregivers in geriatric and allied care, along with a pilot programme to upskill 10,000 tourist guides at major destinations.
Investment signals and regulatory tweaks
On the investment front, the Budget adopts a cautious stance. The Securities Transaction Tax on futures and options has been increased, raising costs for active traders. Tax benefits on Sovereign Gold Bonds have been narrowed, with capital gains exemption now limited to original subscribers who hold bonds until maturity.
At the same time, the decriminalisation of minor tax defaults reduces the risk of prosecution for technical or procedural lapses, offering relief to small taxpayers.
Overall, Budget 2026–27 takes a calibrated approach, offering selective relief to the middle class while prioritising long-term reforms in taxation, healthcare and human capital development.
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Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
