The middle class is hoping for major changes in tax exemptions before Budget 2026. The Section 80C limit has been stuck at ₹1.5 lakh for the past 10 years, and there has been a growing demand to increase it to ₹3 lakh. Amid rising inflation and increasingly expensive home loans, if the government takes this decision, it will be a significant relief for the common man.

Budget 2026: The average Indian taxpayer always hopes for relief from the budget. Over the past few years, the government has made significant changes to the tax system. A new tax regime has now been implemented, offering the benefit of lower tax rates but eliminating old exemptions. Data shows that approximately 72% of taxpayers have chosen the new regime for the 2024-25 fiscal year because it involves less paperwork and a reduced net tax burden.

But the flip side of the coin is that a large section of the population still sticks to the old tax regime. This is due to their old savings, home loans, and future investments. The problem is that the deduction limits on which these taxpayers rely have not been increased in years, while inflation has reached sky-high levels. The upcoming Budget 2026 is expected to clear the dust from these limits.

The 'Lakshman Rekha' of 80C has not changed in 10 years.

Section 80C is the most discussed section. This section provides tax exemptions on PPF, ELSS, children's tuition fees, and home loan principal. Surprisingly, the Rs 1.5 lakh limit has remained unchanged since 2014. Over the past decade, your salary has risen, expenses have increased, and inflation has risen, but the exemptions on savings have remained the same.

Experts believe that the time has come to increase this limit to ₹3 lakh. This will not only help people fight inflation but also promote the habit of saving and investing in the country.

Rising interest burden

Buying a home is every Indian's dream, but in today's times, this dream is proving to be a costly affair. Property prices are skyrocketing, and home loan interest rates are also not low. Currently, home loan interest provides a tax deduction of up to ₹2 lakh annually. Given the rising EMIs and interest burden, this relief now seems like a drop in the ocean.

There are calls for this limit to be raised to ₹3 lakh. Furthermore, if the government extends this exemption to the new tax regime, it would be a lifeline for homebuyers.

Old scope of health insurance

The exemption on health insurance premiums under Section 80D is insufficient for today's medical expenses. Currently, the limit is ₹25,000 for oneself and family, and ₹50,000 for elderly parents. Considering the rapid increase in hospital bills and medication costs, this limit is too low. People often have to dip into their savings or take out loans to pay for treatment. Increasing this limit could provide significant relief to the common man.

Similarly, the additional Rs 50,000 deduction for retirement in NPS (Section 80CCD 1B) is now outdated. Increasing it to Rs 1 lakh would secure people's old age.

PC: TV9Bharatvarsh