The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, offers selective relief across sectors, while raising taxes on certain items, resulting in a limited overall impact on common people.
Some current exemptions from customs duty will be removed, making items that were earlier imported without tax, specifically adult diapers and educational CDs, more expensive.
Basic customs duty on umbrellas will remain 20 per cent or Rs 60 per cent per piece, whichever is higher, to ensure that even lower-cost umbrellas will face a higher tax burden, which will likely increase prices for consumers. Additionally, the duty on accessories and trimmings for umbrellas is also being modified to a minimum of Rs 25 per kg, which may further drive up repair and manufacturing costs.
Sovereign gold bonds and STT raised
The capital gains tax exemption for Sovereign Gold Bonds (SGB) will now only be available to individuals who subscribe at the time of original issue and hold them continuously until maturity, triggering concerns for investors.
This means common investors who purchase SGBs from the secondary market will no longer benefit from this tax exemption.
SGBs have long stood out as a highly tax-advantaged investment in India. They offer investors a fixed annual return of 2.5 per cent, along with a complete exemption from capital gains tax on redemption, irrespective of whether the bonds were bought at the time of issuance from the RBI or acquired later from the secondary market.
Similarly, the Securities Transaction Tax (STT) is being raised significantly. The rate on Futures will increase from 0.02 per cent to 0.05 per cent, while the tax on Options will rise to 0.15 per cent due to higher transaction taxes.
Tax made simple, but with new fees and penalties
While the timeline to revise a tax return is extended to March 31, a nominal fee of Rs 1,000 or Rs 5,000 (depending on whether the total income is below or above Rs 5 lakh) will now be charged if the revision is made after December 31.
However, the filing timeline for non-audit business cases and trusts is extended to August 31.
Crypto-asset reporting penalties: A new penalty of Rs 200 per day is proposed for failing to furnish information on crypto-asset transactions and a penalty of Rs 50,000 will be levied for providing inaccurate information in such statements
Easier procedures for small taxpayers: A one-time, six-month disclosure scheme in the proposed Budget allows small taxpayers to declare overseas assets below certain thresholds with immunity.
The Budget also proposed decriminalising technical errors during the non-production of books of account and certain issues regarding Tax Deducted at Source (TDS) payments, with minor offences now attracting only a fine rather than imprisonment.
Increased taxes on updated returns: Taxpayers who choose to update their returns after reassessment proceedings have been initiated will face an additional 10 per cent tax rate over and above the standard applicable rate for that year.
Economic impact and social welfare
Although the Tax Collection at Source (TCS) rate for overseas tour packages is being rationalised to 2 per cent, the removal of the Rs 10 lakh threshold means this tax will now apply to all tour packages regardless of the amount, requiring upfront tax payment for even small family vacations.
On supporting women and the youth, the Budget proposes establishing one girls hostel in every district for higher education STEM institutions and will introduce a pilot scheme to upskill 10,000 tourist guides.
Not many satisfied with the Budget
The majority of the common people are reporting disappointment, with online reactions suggesting they never had expectations to begin with.
An X user commented, “Nirmala Sitharaman strikes again Budget 2026 proves that ‘no relief’ is now official policy for the middle class.”
Meanwhile, a different user noted that this year’s budget is one of the most “middle-class-friendly reforms.”
“This is one of the most significant middle-class-friendly reforms in recent years, offering real relief, higher disposable income, and stronger purchasing power,” their X post read.
