Budget 2026 Zero Tax for 12 Lakh Income

The budget presentation on Sunday, February 1, 2026, was a historic first. Finance Minister Nirmala Sitharaman delivered her ninth consecutive budget on a weekend, signalling that the government is in "high-gear" mode for the Viksit Bharat (Developed India) 2047 mission.

If you’ve been trying to cut through the noise of news alerts, here is a simplified, human breakdown of what actually happened and how it impacts your bank account.

1. The Big Win: Income Tax & The "Zero Tax" Goal

The headline that everyone is talking about is the massive relief for the middle class. While the base tax slabs remain unchanged from last year, the government has refined the Section 87A rebate to ensure that more people take home their full salary.

Under the New Tax Regime, individuals earning up to ₹12 lakh now pay zero tax. For salaried professionals, when you add the ₹75,000 standard deduction, you can earn up to ₹12.75 lakh without owing a single rupee to the tax department.

The New Tax Regime Slabs (FY 2026-27)

The "Income Tax Act, 2025" officially goes live on April 1, 2026. It’s designed to be simpler, with fewer forms and faster refunds.

2. Foreign Travel & Remittances: A Major Relief

If you’ve ever booked an overseas vacation and been stung by the Tax Collected at Source (TCS), there’s a massive update here.

The government has slashed the TCS on overseas tour packages to a flat 2%. Previously, this could be as high as 20% for certain spending levels. This isn't just for holidays; the 2% rate also applies to money sent abroad for education and medical treatment. It basically stops the government from holding your cash for a year before you can claim it back.

3. The Growth Engine: Bullet Trains and Logistics

Infrastructure is where the government is spending the most "real money." With a capital expenditure (Capex) budget of ₹12.2 lakh crore, the map of India is getting a high-tech makeover.

• Seven New Bullet Train Corridors: High-speed rail isn't just for Mumbai-Ahmedabad anymore. New corridors like Mumbai-Pune, Delhi-Varanasi, and Hyderabad-Bengaluru were greenlit to turn cities into "growth connectors."

• Freight Corridors: A new East-West dedicated freight corridor will link Surat (Gujarat) to Dankuni (West Bengal), aiming to make shipping goods across the country faster and cheaper.

4. The 'Orange Economy': Gaming and Content Creation

One of the most modern additions to the budget is the focus on the AVGC (Animation, Visual Effects, Gaming, and Comics) sector. The Finance Minister is calling this the "Orange Economy."

• Creator Labs: To bridge the talent gap, 15,500 secondary schools and 500 colleges will get "Content Creator Labs."

• Tech Push: The government is also launching ISM 2.0 (India Semiconductor Mission) to move beyond chip design and into making the actual machinery used to manufacture them.

5. The "Big Picture": Fiscal Health

Despite the heavy spending on trains and schools, the government is keeping a tight grip on the nation's wallet.

• Fiscal Deficit: The target is set at 4.3% of GDP, down from 4.4% last year. This is a good sign for inflation and the overall stability of the rupee.

• Bio-Pharma SHAKTI: A new ₹10,000 crore program was launched to make India a world leader in biologics and medicines.

The 2026 budget feels less like a political statement and more like a long-term business plan. By giving the middle class a tax break and investing heavily in high-speed rail and the digital economy, the government is betting that higher consumption and better connectivity will drive the next decade of growth.