Summary of this article
Costlier: Higher STT on derivatives and tighter taxation on buybacks raise costs for traders and promoters; withdrawal of select customs exemptions may marginally increase import prices.
Cheaper for individuals: Lower TCS under LRS and a steep cut in customs duty on personal imports boost disposable cash for travellers, students and patients.
Healthcare relief: Full customs duty exemption on select cancer and rare-disease drugs improves affordability and access.
The Union Budget 2026–27 continues the government’s calibrated approach of fiscal prudence while subtly reshaping cost structures across sectors. Rather than sweeping rate hikes or giveaways, the Budget relies on selective taxation, duty rationalisation and incentives aligned with long-term priorities.
On the costlier side, market participants will feel the immediate impact. The increase in Securities Transaction Tax (STT) on futures and options raises transaction costs for active traders and proprietary desks, potentially curbing excessive speculative activity.
“Additionally, buybacks have been restructured to tax promoters more heavily, narrowing arbitrage opportunities and reducing post-tax returns from such capital distribution strategies. Certain imports may also become marginally expensive as long-standing customs exemptions are withdrawn where domestic manufacturing capabilities have matured,” says Ajay Kejriwal, Executive Director, Choice International.
Sachin Jain, Managing Partner, Scripbox, says that some financial market transactions will become more expensive. The Securities Transaction Tax (STT) on futures has been increased from 0.02% to 0.05%, while STT on options has also been raised on the options premium and on the exercise of options. This makes frequent trading in derivatives costlier and signals a move to curb excessive speculation.
“Promoters participating in share buybacks will face an additional buyback tax, increasing the cost of capital restructuring for large shareholders. Certain compliance-related costs may also rise indirectly for entities not qualifying as “trusted” or “authorized” importers, as incentives are increasingly skewed toward compliant players,” he says.
Conversely, the Budget offers meaningful cost relief to households and growth sectors. A sharp reduction in TCS on overseas tour packages, education and medical remittances under LRS directly improves cash flows for individuals. Customs duty on personal imports has been halved, easing compliance and costs for international travellers. Importantly, full duty exemption on select cancer and rare-disease drugs reinforces the government’s intent to make healthcare more affordable.
“From an industry perspective, clean energy, electronics and EV-related supply chains stand out as beneficiaries. Duty exemptions for lithium-ion battery manufacturing inputs, solar glass materials and electronic components are expected to lower costs over time and enhance India’s competitiveness. Relief for biogas-blended CNG further aligns taxation with sustainability goals,” says Kejriwal.
Jain says a wide range of goods and services is set to become cheaper. Basic Customs Duty (BCD) exemptions have been extended or introduced for several sectors, components for aircraft manufacturing, defence MRO, microwave ovens, lithium-ion battery manufacturing, solar glass inputs, nuclear power projects, and critical minerals. These measures are expected to lower production costs and, eventually, consumer prices. “Healthcare sees direct relief with BCD exemption on 17 cancer drugs, reducing treatment costs. Overseas spending becomes less expensive as Tax Collected at Source (TCS) on foreign tour packages, education, and medical expenses under LRS has been reduced to 2 per cent,” he adds.
Overall, the Budget signals a clear message: speculative excess will be taxed higher, while consumption, healthcare, clean energy and domestic manufacturing will be supported. The real impact will unfold not in headline numbers, but in how businesses adapt to this evolving cost landscape.
What Gets Cheaper
From healthcare to home appliances, the Union Budget has something in store for everyone. Here’s a look at the items which have become more expensive:
* Healthcare to Homecare: The reduction of basic customs duty is likely to make 17 essential cancer drugs and medicines for 7 rare diseases cheaper. Additionally, made-in-India microwave ovens and mobile phones are also set to become cheaper.
* Travel & Education Abroad: Overseas tour packages and foreign education remittances are set to become more affordable following the reduction of Tax Collected at Source rates, which are being reduced to 2 per cent from up to 20 per cent prior to the budget.
* Green Energy & Sustainability: Solar panels, EV batteries (Lithium-ion cells), Energy transition equipment and Nuclear plant components are expected to become more affordable, fostering a shift towards renewable energy.
What Gets Costlier
The Union Budget 2026 has hiked import duties and excise duties, making certain goods more expensive. Here’s a look at goods that may become more expensive:
* Industrial & Luxury Imports: Luxury watches and high-end imported alcohol are expected to become more expensive amid an increase in import duties to discourage luxury consumption and promote local alternatives.
* The "Sin Tax”: Cigarettes, pan masala, and tobacco products are set to become more expensive following a hike in excise duties and health cesses.
* Coffee & Gaming: Coffee roasting/brewing machines and video game manufacturing parts may become more expensive following the removal of previous customs duty exemptions.
