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The Union Budget for FY 2026–27 has been unveiled, and as always, it brings a mixed bag of reliefs and restrictions for citizens, investors, and businesses. While the government has eased taxes and duties on several consumer-centric and growth-oriented sectors such as overseas travel, education, healthcare, renewable energy, and exports, it has simultaneously tightened compliance norms and increased costs in certain financial activities like derivatives trading.

Presented at a time when global and domestic economic uncertainties continue, the budget aims to strike a balance between stimulating consumption and enforcing fiscal discipline. India’s GDP growth for FY27 is projected to remain between 6.8% and 7.2%, and the policy measures announced are designed to support sustainable growth while keeping a close eye on revenue leakages.

The government has announced multiple tax cuts and duty exemptions to make key services and essential goods more affordable and globally competitive.

Overseas Travel Packages
One of the most consumer-friendly announcements is the sharp reduction in Tax Collected at Source (TCS) on international tour packages. The rate has been brought down to 2%, from the earlier range of 5% to 20%. This move is expected to significantly reduce upfront costs for individuals planning foreign vacations.

Education Abroad
Under the Liberalised Remittance Scheme (LRS), tax deducted at source (TDS) on education-related remittances has been reduced. This will ease the financial burden on students pursuing higher education overseas and their families.

Alcohol Scrap and Select Minerals
Customs duty on alcoholic liquor scrap and certain minerals has been cut from 5% to 2%, benefiting recycling and raw material-dependent industries.

Boost for Footwear Exports
To enhance India’s export competitiveness, raw materials imported for manufacturing shoe uppers meant for exports have been made duty-free, offering relief to footwear exporters.

The budget strongly supports India’s clean energy transition.

• Basic Customs Duty (BCD) has been completely removed on equipment used for energy transition.

• Raw materials required for manufacturing solar glass are now exempt from BCD.

• Capital goods needed for extracting and processing critical minerals have also received duty relief.

Aviation Sector Relief
Customs duty on components and parts used in the manufacturing of civilian aircraft has been eliminated, which is expected to lower production costs and encourage domestic manufacturing.

Personal Imports
Goods imported for personal use will now attract a lower customs duty of 10%, down from 20%, making select imported items more affordable.

Healthcare and Life-Saving Drugs
Medicines used for treating rare diseases and cancer have been completely exempted from basic customs duty, potentially reducing treatment costs for patients.

Support for Fishermen and Nuclear Projects
Fish caught by Indian fishermen within Indian waters will no longer attract BCD. Additionally, imports required for nuclear power projects have been granted customs duty exemptions.

Despite the reliefs, the government has adopted a strict stance in certain areas.

Stricter Income Tax Penalties
Taxpayers providing incorrect income details may now face penalties of up to 100% of the tax amount involved, reflecting the government’s push for accurate reporting.

Disclosure of Movable Assets
Failure to disclose movable assets will now attract penalties, expanding the scope of compliance requirements.

Higher Cost for F&O Traders
Derivatives trading has become more expensive, as the Securities Transaction Tax (STT) on futures and options has been increased from 0.02% to 0.05%. This move directly impacts active traders and high-frequency market participants.

The Union Budget 2026 clearly focuses on encouraging consumption, exports, healthcare access, and green energy investments, while reinforcing tax discipline and financial transparency. The true impact of these measures will unfold in the coming months, as changes reflect in consumer spending, market activity, and overall economic momentum.