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The Union Budget 2026-27 has delivered targeted relief for consumers, exporters and strategic industries, while tightening taxes and select goods or assets. The proposals aim to improve the quality of life, support domestic manufacturing and exports, and generate additional revenue from financial markets and sin products.
Among the most consumer-facing measures, the government, in the Budget, has sharply reduced the tax collected at source (TCS) on overseas tour packages to 2 per cent, down from the earlier 5-20 per cent structure, without any minimum amount. Similarly, TCS on foreign remittances for education and medical treatment under the Liberalised Remittance Scheme (LRS) has been cut from 5 per cent to 2 per cent, easing cash-flow pressures on households sending money abroad. Healthcare has also received a boost, with basic customs duty (BCD) fully exempted on 17 cancer and critical illness drugs. In addition, seven additional rare diseases have been added to the list of conditions eligible for duty-free personal imports of medicines and food for special medical purposes. To support clean energy and self-reliance, the Budget exempts customs duty on sodium antimonate, a key ingredient in solar glass manufacturing. Customs duty exemptions have been extended for nuclear power projects till 2035, regardless of plant size, reinforcing the government's long-term energy security strategy. In a move to strengthen domestic aviation manufacturing, the Budget provides BCD exemption on components and parts, including engines, used in the manufacture of civilian aircraft. Specified parts used in the manufacture of microwave ovens have also been exempted from customs duty, supporting value addition in consumer electronics. International travellers will benefit from a simplified baggage regime, with customs duty on all dutiable personal-use imports cut from 20 per cent to 10 per cent. "To rationalise the customs duty structure for goods imported for personal use, I propose to reduce the tariff rate on all dutiable goods imported for personal use from 20 per cent to 10 per cent," the Finance Minister said. Exporters in the textile and leather sectors have been given more time to fulfil export obligations. The export realisation period has been extended from six months to one year, a move expected to ease working capital constraints. "I propose to extend the time period for export of final product from the existing 6 months to 1 year, for exporters of leather or textile garments, leather or synthetic footwear and other leather products," she said. On the revenue side, the government has raised the Securities Transaction Tax (STT) on futures trading from 0.02 per cent to 0.05 per cent. STT on options premium and exercise has been increased to 0.15 per cent. Tax collection at source on the sale of alcoholic liquor, minerals and scrap has been increased from 1 per cent to 2 per cent. On tendu leaves, TCS will be reduced from 5 per cent to 2 per cent. For tobacco products, the National Calamity Contingent Duty (NCCD) on chewing tobacco, gutkha and similar products has been increased from 25 per cent to 60 per cent. However, the government clarified that the effective duty incidence will be maintained at 25 per cent through notification, limiting the immediate price impact. (ANI)
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