Union Budget 2026: What are the wins for common man and small taxpayers?

Today, Sunday, February 1, 2026, Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27, her ninth consecutive budget, from Kartavya Bhawan. The speech, themed around three kartavyas — accelerating growth, fulfilling aspirations, and ensuring inclusive access — placed the common man at the heart of economic reform. From salaried workers to small business owners, from accident victims to students abroad, the budget delivers quiet wins.

While no changes were made to income tax slabs for AY 2026-27, the government introduced major compliance relief. The Income Tax Act, 2025 comes into force from April 1, 2026, replacing the 65-year-old law with simplified forms, clearer rules, and digital-first processing. Taxpayers can now revise returns until March 31 on payment of a nominal fee, reducing stress and penalties.
For salaried individuals and pensioners, the ITR filing deadline is now July 31, with August 31 for non-audit businesses. This extra time is aimed to avoid last-minute errors and ensures smoother processing.

One of the most practical changes is the automated system for issuing nil or lower TDS certificates. Small taxpayers — including senior citizens earning bank interest, freelancers, and rental income recipients — no longer need to visit tax offices or submit physical applications. The system will generate certificates automatically based on income thresholds and tax history, cutting red tape and delays.

In an another move, interest awarded by the Motor Accident Claims Tribunal (MACT) will now be fully exempt from income tax. Additionally, no TDS will be deducted on such payments. This ensures that accident victims and families of the deceased receive every rupee meant for recovery and rehabilitation, without any tax erosion.

Families planning overseas education or medical treatment got a major relief. TCS (Tax Collected at Source) under the Liberalised Remittance Scheme (LRS) has been cut from 5% to 2%, reducing the upfront cash burden. Similarly, TCS on overseas tour packages is now 2%, down from 5% or 20%, making international trips more affordable.
The import of life-saving drugs for cancer, diabetes, and rare diseases is now duty-free, lowering medicine costs for patients.

A six-month Foreign Asset Disclosure Scheme allows small taxpayers — including students, NRIs, and tech professionals — to voluntarily declare undisclosed foreign assets or income without penalty or prosecution. This one-time window offers a clean slate for those who missed earlier disclosures due to ignorance or complexity.

The common man will benefit from lower prices on everyday tech. Basic customs duty (BCD) has been removed on capital goods for lithium-ion battery manufacturing, solar glass raw materials, and mobile phone components, making electric vehicles, solar panels, and smartphones more affordable.
This also supports domestic manufacturing and long-term savings on energy and gadgets.

When a resident buys property from an NRI, TDS must be deducted. Earlier, this required a TAN (Tax Deduction Account Number), a cumbersome process. Now, no TAN is needed — buyers can use their PAN to deduct TDS, simplifying real estate transactions for common investors.