Union Budget 2026-27: What the Middle class really gets this year?

The Union Budget 2026-27 may not have delivered instant cheer for middle-class salaried taxpayers, but a closer look reveals several measures aimed at easing financial pressure and supporting long-term stability. 

While there is no major overhaul of tax slabs, Finance Minister Nirmala Sitharaman’s ninth budget focuses on policy continuity, compliance relief and indirect benefits that matter to middle-income households.

Income Tax: Status Quo Continues

For salaried taxpayers, there is no fresh tax relief this year. The government has retained the existing tax structure, under which income up to Rs 12 lakh remains tax-free. With the standard deduction of Rs 75,000, the effective tax-free income stands at Rs 12.75 lakh. Tax slabs remain unchanged, signalling stability but no immediate gain for take-home pay.

Also Read: Union Budget 2026–27: New freight corridor, waterways to boost Odisha’s industrial connectivity

Tax Rationalisation and Compliance Relief

The Budget places emphasis on reducing compliance hassles and easing overseas spending burdens. Tax Collected at Source (TCS) on overseas tour packages has been cut to 2% from the earlier 5% and 20%. Similarly, TCS on remittances under the Liberalised Remittance Scheme for education and medical needs has been reduced to 2%.

Return filing timelines have also been streamlined. Individual taxpayers can continue filing ITR-1 and ITR-2 till July 31, while non-audit businesses and trusts get time till August 31. Buybacks will now be taxed as capital gains instead of dividends, offering protection to retail investors. Interest from Motor Accident Claims Tribunal awards will be tax-exempt, with TDS removed.

Lower Costs and Job Push

Seventeen cancer drugs will become cheaper due to duty exemptions, along with medicines for rare diseases. Lower duties on components used in electronics, leather goods and footwear may also reduce consumer costs. Higher capital expenditure and allocations to railways, tourism, logistics and technology are expected to boost job creation.

While Budget 2026-27 offers no direct tax windfall, its focus on cost relief, easier compliance and employment growth provides steady, long-term support for the middle class.