Budget 2026 Income Tax Change Expectations : Like every Union Budget, this year too taxpayers are carrying a long wishlist for Budget 2026-27, and tax relief is right at the top. As Finance Minister Nirmala Sitharaman prepares to present Union Budget 2026–27 on February 1, expectations are high among salaried employees, middle-class households, senior citizens and investors. This will be Sitharaman’s ninth straight Budget and the third full Budget of the Modi 3.0 government.
One of the biggest talking points ahead of Budget 2026 is the new tax regime. After nil tax on income up to Rs 12.75 lakh and two rounds of slab revamps in recent years, salaried taxpayers are asking what more relief is possible. Many experts believe the government may now push harder to make the old tax regime irrelevant, though millions of taxpayers still rely on deductions such as Section 80C, Section 80D and home loan benefits.
Budget 2026 income tax expectations: New vs old tax regime, slabs and rebates under spotlight
The Section 87A rebate is another major expectation. From Rs 5 lakh earlier, the rebate now effectively offers zero tax up to Rs 12 lakh under the new regime. The middle class is hoping Budget 2026 could extend this relief further, possibly up to Rs 15 lakh, to counter inflation and rising living costs. Alongside this, there is demand for parity in standard deduction benefits between the new and old tax regimes after the recent hike to Rs 75,000.
Capital gains taxation is also on the radar. After frequent changes to equity, debt mutual funds and property tax rules, investors want Budget 2026 to simplify holding periods, rates and indexation-related provisions. Similar clarity is being sought on home loan tax benefits, especially after slab overhauls that have reduced the relevance of traditional deductions.
Budget 2026 tax wishlist: Capital gains, home loans and retirement savings in focus
Retirement taxation remains another focus area. With higher employer contributions allowed under NPS, savers are now looking for further tax clarity on EPF, NPS withdrawals, annuities and even mutual fund–linked retirement schemes. Senior citizens and pensioners are expecting more relief on pension income, healthcare deductions and compliance requirements.
Tax administration issues are also part of taxpayers’ expectations from Budget 2026. Delays in income tax refunds, AIS mismatches, scrutiny notices, TDS and TCS complications, and faceless assessment concerns have led to calls for easier compliance and faster resolution. The new Income Tax Bill 2025 and the shift to the “Tax Year” concept from FY 2026–27 have added to expectations of simpler ITR filing and clearer rules.
Overall, Budget 2026 is being seen as a test of whether the government can balance tax simplicity with meaningful relief. While big tax cuts may be unlikely, taxpayers are hoping for predictable policies, fewer disputes and a system that rewards honest compliance.
Source: FINANCIAL EXPRESS
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