Taxpayers’ eyes are once again on Finance Minister Nirmala Sitharaman regarding the Union Budget 2026. In the last few years, the government has clearly indicated that its priority has been to provide relief to the pockets of the middle class and salaried taxpayers. The introduction of the new income tax regime in 2020 and its improvements every year thereafter have been part of this strategy. In the last budget, the government had given a big gift to the taxpayers by making income up to Rs 12 lakh tax-free under the new regime. Now the question is, is there going to be any big surprise in Budget 2026?
1. Expectation of change in tax slabs
Experts believe that this time the government may change the slabs of the old tax regime. Till now the tax structure in the old regime has remained the same, while the new regime has been made increasingly attractive. In order to increase consumption, the government can focus on providing relief to the middle income group.
2. Will TDS rates be reduced?
Currently, multiple TDS rates are applicable on different transactions, due to which there is confusion among taxpayers. In Budget 2026, the government can simplify the TDS rates and limit them to 2–3 slabs, which will make compliance easier.
3. Standard deduction may increase in the old regime
The standard deduction in the new regime has been reduced to Rs 75,000, whereas in the old regime it is still Rs 50,000. In view of rising inflation, the government may announce increase in standard deduction in the old regime also.
4. Joint taxation for husband and wife
On the recommendation of ICAI, the government may consider introducing joint taxation system for husband and wife. This will reduce the total tax liability of the family and the tax system can become more balanced.
5. Increase in LTCG tax-free limit
There may be relief news for stock market and mutual fund investors. The government may increase the tax-free limit of long-term capital gains from Rs 1.25 lakh to Rs 1.5 lakh.
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