Union Budget 2026 is on the horizon, promising policy shifts that could redefine personal finances and economic trajectories. At its core lie direct and indirect taxes, intertwined with inflation control and market health. Mastering these basics transforms budget viewing from confusion to clarity.
Direct taxes strike at the source: your income. Paid straight to government coffers, they can’t be forwarded. CBDT’s domain includes income tax—progressive slabs from nil to 30% plus surcharges—hitting salaries, freelance gigs, rentals. Corporates face base rates post-reforms, with MAT ensuring minimum contributions. Sell a property profitably? Capital gains tax bites, varying by holding period. Trading equities incurs STT, a tiny transaction fee funding markets.
Designed for fairness, higher brackets fund social programs, narrowing inequality gaps. Compliance has surged with faceless assessments and pre-filled returns.
Indirect taxes lurk in every transaction, surcharging goods and services. Pioneered by GST, it streamlined a chaotic tax maze, now collecting trillions monthly across five slabs. Customs shield borders against cheap imports; excises and cesses target pollutants and luxuries like SUVs, pan masala.
These taxes pack punch: they generate bulk revenue yet ignite instant price swings. Budget hikes on essentials spike inflation; cuts on durables spur demand. Markets react sharply—auto stocks soar on duty relief, FMCG dips on processed food levies.
Critics call indirect taxes unfair, pinching essentials hardest for the bottom pyramid. Governments counter with exemptions for unbranded foods, milk, and education, piling rates on bling and vices. Strategic duties bolster MSMEs against China floods.
For Budget 2026, watch for direct tax sweeteners like higher exemptions amid wage stagnation, or GST council tweaks for realty, health. These moves will calibrate growth-inflation balance, impact corporate earnings, and alter household budgets. Informed citizens drive better policy discourse—dive into taxes today.