- TCS rates on overseas tour packages and LRS remittances for education reduced to 2%
- Tax filing deadlines staggered; buybacks taxed as capital gains to aid retail investors
- Duty exemptions on cancer drugs and increased capital expenditure to boost jobs
Union Budget 2026 may have failed to cheer up the average middle-class salaried taxpayer. While there is no direct relief through restructured tax slabs, the fine print of Finance Minister Nirmala Sitharaman's ninth budget speech offers a scope for growth to the middle class and small investors through various means. Live Updates
Here's a comprehensive view on what's in for the middle class:
Income Tax
There's no new tax relief for the salaried class this year, with the government opting for policy continuity. The Budget retains the tax regime under which annual income up to Rs 12 lakh will remain tax-free. Adding Rs 75,000 standard deduction, the tax-free income rises to Rs 12,75,000. There is no new change in the tax slabs this year.
Tax Rationalisation
The Budget aims to reduce compliance burdens and customs rates on the overseas remittances to provide relief to the middle class. The focus is also on protecting long-term household savings while improving the overall taxpayer experience.
The 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%.
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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 Budget also proposes taxing all the buybacks as capital gains instead of treating those as dividends to protect minority retail investors.
The interest awarded by Motor Accident Claims Tribunal to individuals will be exempted from income tax, and the TDS (tax deducted at source) applied to this will be removed.
A single-window filing with depositories for Form 15G or Form 15H for TDS on dividends and interest is also set to make compliance easier.
Cheaper Drugs, Products
About 17 cancer medicines will get cheaper with a 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 manufacture of microwave ovens, TV equipment, leather goods, and footwear.
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Job Creation
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. Focus has also been on logistics and technology sectors.
