As Budget 2026 approaches, income tax expectations are rising across India. Finance Minister Nirmala Sitharaman will present the Union Budget 2026-27 on February 1 for the ninth consecutive year. Taxpayers are now watching closely, especially the salaried middle class and long-term investors.
Last year, the government announced major income tax relief under the new tax regime. Income up to Rs. 12.75 lakh became tax-free, thanks to higher rebates. Salaried employees also received a higher standard deduction. These measures lowered the tax burden for many people. However, taxpayers following the old tax regime did not receive any major relief. This difference has increased pressure for balanced changes in Budget 2026.
A key demand this year is a higher standard deduction. Many salaried taxpayers want the deduction raised to Rs. 1 lakh. Daily expenses such as rent, food, education, and transport have increased. A higher standard deduction can improve monthly take-home income without adding complexity.
Section 80C is another major focus this time. The current limit of Rs. 1.5 lakh has remained the same for many years. During this time, incomes and costs have both increased. Taxpayers are now expecting the government to raise the Section 80C limit to Rs. 2 lakh or Rs. 3 lakh. This change can support long-term savings in PPF, ELSS, insurance, and pension plans.
Investors are also watching Budget 2026 closely. There is a strong demand for higher LTCG relief. Many investors consider the current exemption limit to be low. Raising the LTCG exemption to Rs. 2 lakh can encourage long-term equity investments and support financial planning.
Homebuyers are facing rising property prices and higher loan EMIs. Many taxpayers are asking for higher home loan interest deductions. The current limits no longer reflect market conditions. Better home loan relief can reduce taxable income and provide support to middle-class families.
The future of the old tax regime remains unclear. The new regime offers simple slabs but fewer deductions. The old regime offers deductions but lacks recent updates. Budget 2026 is expected to give clear direction on whether both regimes will continue or one will be phased out.
Senior citizens also expect special attention. The new tax regime does not provide age-based benefits. Many are hoping for higher rebates or better health-related deductions to manage medical expenses.
Apart from tax rates, taxpayers want smoother systems. Delays in refunds and notice-related issues have caused frustration, pushing the demand for faster ITR processing with fewer errors.
Overall, Budget 2026 may not bring massive tax cuts, but small and practical changes can make a big difference. Clear rules, simple filing, and focused relief define income tax expectations this year.
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