Budget 2026: The last year's Union Budget (Budget 2025) delivered some significant relief for salaried individuals and the middle class, bringing in structural changes including the introduction of a new tax regime, which raised the basic tax exemption limit to Rs 4 lakh and enhanced the rebate, making income up to Rs 12 lakh effectively tax-free.
Additionally, the standard deduction for salaried individuals was increased to Rs 75,000, up from Rs 50,000 in the Financial Year 2025-26 Budget, increasing the total tax-free income threshold to Rs 12.75 lakh under the new regime.
As the government now prepares for the FY26-27 Budget, financial and taxation experts weighed in on the need for continued reforms.
Their collective demands include raising the limit for tax exemptions under Section 80C of the Income Tax Act, introducing measures to link tax slabs with inflation, and further increasing the standard deduction.
Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Pvt. Ltd., asserts that the primary demand for personal taxes is a clear alignment with current economic realities.
"For almost ten years now, the limit for Section 80C has been stuck at Rs 1.5 lakh, and the health insurance deductions allowed under Section 80D have also been very limited," Maurya noted, highlighting that taxpayers are struggling as the costs of premiums, EMIs, and education have risen significantly.
He further demanded a hike in the 80C limit to approximately Rs 3 lakh, an increase in health insurance limits, and a raise in the income threshold for the highest 30 per cent slab, which would particularly benefit families earning between Rs 10–35 lakh.
Building on the focus for simplicity and structural change, Karthik Narayan, Vice President – Title, Tax & Transition, Stellar Innovations, believes Budget 2026 is the opportune moment to introduce predictability into India’s dual tax regime.
Since a "clear majority of taxpayers are opting for the new tax regime," Narayan suggests that the next logical steps involve making tax slabs inflation-linked, pilot-testing Section 87A rebate thresholds, and removing ambiguities that affect small taxpayers.
However, in line with India’s savings-oriented culture, where Section 80C–linked products are crucial for long-term financial goals, he demands that any changes to the old tax regime be introduced gradually rather than being abruptly phased out.
Mirroring the sentiment for relief to the salaried class, Prof Shikha Bhatia, Associate Professor - Finance and Accounting, IMI Delhi, demands that the upcoming budget provide substantial benefits to reduce household tax burdens and increase disposable income while maintaining fiscal prudence.
Her specific expectations include a further increase in the tax-free slab, an increase in the standard deduction to Rs 1 lakh, simplified compliance for TDS and TCS, and quicker return processing and faster refunds.
Prof Prateek Bedi, Assistant Professor, Finance and Accounting, IMI Delhi, echoes this need for rationalisation of tax slabs.
He demanded that the focus should be on further progressivity and simplicity, recommending the recalibration of marginal rates to align with inflation, gradually increasing the threshold for the highest tax bracket, and merging older, complex provisions into a single, transparent tax code to reduce compliance burden.
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Beyond personal income tax, Gourav Sogani, Partner, Economic Laws Practice, shifts the focus to the Direct Tax front.
"However, taxpayers continue to expect a more harmonised capital gains framework. This inter alia includes rationalising multiple rate slabs, reducing disparities across listed and unlisted securities, debt instruments, and real estate, and potentially increasing the long-term capital gains deduction threshold for listed securities," Sogani added.