Budget 2026 Explained: What Costs Less and What Costs More

On 1 February 2026, the Union Finance Minister presented Budget 2026, outlining several policy measures that directly influence household expenses, consumer behaviour, and business costs. The Budget focuses on easing the burden on essential needs and long-term growth areas, while selectively increasing costs to discourage non-essential consumption and speculative activities.

Below is a simplified overview of what becomes cheaper and what turns costlier under Budget 2026.

Where You Can Save

• Critical medicines

  - Basic Customs Duty (BCD) has been fully exempted on 17 cancer drugs and 7 drugs used for rare diseases, significantly reducing the long-term financial burden on affected families and improving access to life-saving treatments.

• Overseas travel and education spending

  - Tax Collected at Source (TCS) on overseas tour packages has been reduced from 5%–20% to 2%. Additionally, TCS on foreign remittances for education and medical treatment abroad has also been capped at 2%, lowering the upfront cash outflow for individuals.

• Mobile phones and tablets

  - To promote domestic manufacturing, customs duties on key components such as connectors, PCBA, and battery covers have been reduced. This move supports the Make in India initiative and is expected to make locally assembled smartphones and tablets more affordable.

• Electric vehicles and clean energy products

  - Duty relief on EV batteries and renewable energy equipment supports wider adoption and gradual cost reduction. BCD exemption on lithium-ion cells and solar glass ingredients helps reduce costs.

• Manufacturing and export inputs

  - Duty-free imports of raw materials and components, including inputs for shoe uppers and technical textiles, will help Indian manufacturers enhance competitiveness, manage costs efficiently, and strengthen export potential.

• Leather footwear

  - Duty-free import of inputs such as "Wet Blue" leather will lower the prices of high-quality leather shoes and accessories.

• Microwave ovens

  - Specified parts and components used in the manufacture of microwave ovens have been exempted from BCD, reducing production costs and potentially lowering retail prices.

• Personal imports

  - Customs duty on personal imports has been reduced from 20% to 10%, making items ordered from abroad for personal use more affordable.

Where Prices Have Risen

• Tobacco and pan masala

  - An increase in National Calamity Contingent Duty (NCCD) raised prices of tobacco products and pan masala, reinforcing the government’s intent to discourage consumption.

• Imported luxury watches and alcohol

  - Higher customs duties on premium luxury watches, as well as increased duties on imported spirits and wines, will make these products more expensive, encouraging domestic value addition and moderation in luxury imports.

• Futures and options trading

  - The Securities Transaction Tax (STT) has been increased to 0.05% on Futures and 0.15% on Options, raising transaction costs for frequent traders and encouraging a more disciplined and long-term approach to market participation.

• High-end cameras and filming equipment

  - Higher duties on select professional filming, camera, and sound recording equipment will increase the cost of importing such high-end gear.

• Coffee machines

  - The withdrawal of existing BCD exemptions on coffee roasting and brewing units may result in higher prices for cafe-style coffee machines used at home or in small establishments.

• Certain fertilizers

  - The removal of import fee and customs duty exemptions on certain fertilizer inputs, including Ammonium Phosphate, is expected to increase the landed cost of these materials. As a result, prices of certain fertilizers and complex fertilizer products may rise, impacting input costs for the agricultural sector.

What This Means for You

For most households, Budget 2026 provides relief in essential areas such as healthcare, education-related foreign expenses, and clean energy adoption. At the same time, increased costs on luxury consumption and speculative trading signal a policy shift toward encouraging responsible spending and long-term financial planning.

Manufacturers and exporters continue to benefit from duty rationalisation measures, supporting improved compliance, operational efficiency, and global competitiveness.

Conclusion

Budget 2026 adopts a balanced approach by making necessities more affordable while selectively increasing costs on non-essential and speculative activities. Medical and education expenses become easier to manage, travel costs are moderated, and clean energy solutions receive a further push. At the same time, higher costs on luxury consumption and short-term trading encourage more mindful spending decisions.

Source - ClearTax (Budget 2026 Analysis)

Disclaimer (Investor Education / General Awareness)

This blog has been prepared solely for general information and investor education purposes, based on the Union Budget 2026 announcements, the Budget Speech, and publicly available sources. The content is intended to provide an overview of changes that may impact household expenses and consumer costs and does not constitute investment advice, tax advice, legal advice, or a recommendation or solicitation of any kind.

While due care has been taken to ensure the accuracy of the information and figures presented, the applicability and impact of the provisions discussed may vary based on individual circumstances and subsequent notifications, amendments, or clarifications issued by the Government or regulatory authorities. Readers are advised to refer to relevant official notifications or consult appropriate professionals before acting on the information contained herein.