Budget 2026 Expectations: The upcoming 2026-27 Budget, set to be unveiled on February 1st, has become a hot topic for the middle class and working individuals. Finance Minister Nirmala Sitharaman is gearing up to present her ninth budget in a row. Last year, the new tax system exempted income up to Rs 12.75 lakh from taxes. This year, there are hopes that the tax system will be even more straightforward and advantageous.
The biggest demand for salaried people
The main request from the salaried class is to increase the basic tax-exemption limit, allowing the middle class to benefit directly. Additionally, there are rising expectations that the standard deduction will be raised from the current Rs 75,000 to Rs 1 lakh or more. This change would help salaried individuals save on their everyday expenses. Taxpayers who are switching to the new tax regime are hoping that the 30% tax slab will apply to incomes up to Rs 30 lakh, preventing any tax shock despite salary hikes.
Confusion over the old tax system
Those under the old tax system are looking for clear guidance from the government regarding its future. Tax experts warn that abruptly discontinuing it could negatively impact those who depend on insurance, home loans, and retirement plans. As a result, a gradual transition or some form of relief is anticipated.
Question of tax relief for married couples
The call for joint taxation (combined tax for married couples) has been made for many years. With Budget 2026 approaching, this topic is back in the spotlight. Experts suggest that this could lessen the tax burden for single-income and middle-class families, although implementing it is seen as challenging. Still, the demand continues.
The highest demand is for deductions within the new tax framework.
Numerous taxpayers are also requesting that deductions such as Sections 80C, 80D, and home loan interest be incorporated in some limited capacity into the new tax structure. They contend that while lower tax brackets are essential, the absence of tax advantages on savings, insurance, and home purchases would render the new tax system inadequate for many families. Consequently, it is anticipated that in Budget 2026, the government will strive to find a balance between reduced tax rates and fundamental deductions.
LTCG tax and investor worries
Equity and mutual fund investors are looking for relief from LTCG taxes, believing that this will enhance post-tax returns and promote long-term investment.
New Emphasis on Retirement Savings
AMFI has proposed the introduction of mutual fund-linked retirement plans in Budget 2026-27, which would offer tax benefits akin to those of the NPS. The goal is to expand retirement options and bolster long-term savings.
What do senior citizens desire?
Senior citizens are seeking an increase in the tax-free income threshold, more exemptions on health insurance, and tax relief on interest from fixed deposits and small savings accounts. Additionally, simplifying ITR filing for individuals with pension and interest income is a significant request.
Homebuyers and women’s aspirations
With rising EMIs, homebuyers are advocating for an increase in the home loan interest deduction under Section 24(b). There are also discussions about additional tax benefits for first-time homebuyers and women homebuyers. Relief in this area is expected to boost workforce participation among women taxpayers and promote long-term savings.
From NRIs to retirees, everyone wants easy taxes
Whether it’s NRIs, senior citizens, or retired taxpayers, everyone has one common demand: a simple and predictable tax system. Simpler rules, less confusion, and stable policies will also improve tax compliance.
A common demand among taxpayers is to simplify ITR filing. Shorter notices, faster refunds, improved pre-filled data, and relief from surcharges and cess are among the key expectations this time around.