💰 Tax Planning7 min read

Union Budget 2026: What It Means For Your Freedom Number

Budget 2026 brings stability over surprises. No income tax changes, TCS reduced for foreign remittances, capital gains untouched. What this means for your Freedom Number planning.

Union Budget 2026: What It Means For Your Freedom Number

A practical breakdown for middle-class Indians planning their financial freedom

Key Highlights

  • Income tax slabs unchanged - ₹12 lakh remains tax-free
  • TCS on education & travel abroad reduced from 5% to 2%
  • Capital gains tax unchanged - LTCG at 12.5%
  • New Income Tax Act 2025 effective from April 1, 2026
  • Capital expenditure raised to ₹12.2 lakh crore

The Big Picture: Stability Over Surprises

This budget is about continuity, not disruption. After last year's significant tax relief (income up to ₹12 lakh made tax-free), the government chose to consolidate rather than announce new headline-grabbing changes. For those planning long-term, predictability is actually good news.

Income Tax: No Changes

Tax slabs remain unchanged. Income up to ₹12 lakh continues to be tax-free under the new regime. For salaried individuals, this extends to ₹12.75 lakh (including ₹75,000 standard deduction). The New Income Tax Act 2025 comes into effect from April 1, 2026 with simplified ITR forms.

What this means for your Freedom Number: Your tax planning remains the same. If you're earning ₹15 lakh, your tax liability stays at ₹97,500. At ₹20 lakh, it's ₹1.92 lakh. These stable rates mean your post-tax income projections remain valid.

TCS Relief: Win for Parents Sending Kids Abroad

  • TCS on overseas tour packages reduced from 5%/20% to flat 2%
  • TCS for education under LRS reduced from 5% to 2%
  • TCS for medical treatment abroad also down to 2%

If you're sending ₹20 lakh for your child's education abroad, your TCS drops from ₹1 lakh to ₹40,000. That's ₹60,000 more staying in your account, even if temporarily. Cash flow matters when managing education expenses alongside Freedom corpus building.

For Investors: Capital Gains Unchanged

  • No changes to LTCG or STCG tax rates
  • LTCG on equity remains at 12.5% (above ₹1.25 lakh exemption)
  • STCG on equity stays at 20%
  • Share buybacks will now be taxed as capital gains

For those using the 4-5% Safe Withdrawal Rate strategy, the LTCG exemption helps. If you're withdrawing ₹15-20 lakh annually from a diversified portfolio, structuring withdrawals to stay within or near the ₹1.25 lakh LTCG exemption each year reduces your tax burden.

Infrastructure Push

  • Capital expenditure raised to ₹12.2 lakh crore
  • Seven high-speed rail corridors announced
  • India Semiconductor Mission 2.0 with ₹40,000 crore allocation
  • Fiscal deficit at 4.3%

Infrastructure and manufacturing remain government priorities. But don't chase budget themes. If infrastructure aligns with your long-term asset allocation, continue your SIPs. Budget-driven momentum often reverses within weeks.

The FINNCAL Bottom Line

For those building their Freedom corpus: Your tax situation is stable. TCS reduction helps if you have foreign remittance needs. Investment taxation unchanged — continue your equity allocation strategy.

For those already in Freedom Living: Withdrawal strategy remains unchanged. LTCG exemption of ₹1.25 lakh continues. Plan systematic redemptions to optimize tax.

The real message: This budget doesn't change your Freedom Number calculation. Your savings rate, investment discipline, and expense management matter far more than any budget announcement.

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