With less than two weeks to go before the Union Budget 2026 is presented, expectations are rising among taxpayers for another round of meaningful tax relief. After the significant announcements in last year’s budget, tax experts believe the government may once again focus on simplifying income tax rules while providing much-needed relief to the middle class. Key demands include a higher standard deduction, expansion of the 30% tax slab, easier capital gains rules, and the introduction of an amnesty scheme to resolve long-pending tax disputes.
Budget 2025 Set the Tone for Tax Relief
The previous Union Budget marked a turning point for individual taxpayers. The government announced major relief by making annual income up to ₹12 lakh tax-free under the revised tax regime. For salaried individuals, this effectively meant that income up to ₹12.75 lakh could be earned without paying any income tax, after accounting for the standard deduction.
This move was widely welcomed, especially by salaried and middle-income taxpayers, as it increased disposable income and improved household savings. Building on this momentum, experts believe Budget 2026 could go a step further in easing the tax burden.
Demand to Expand the 30% Tax Slab
One of the most prominent expectations from Budget 2026 is a revision of the highest income tax slab. Currently, the 30% tax rate applies once income crosses a relatively modest threshold, which many experts argue no longer reflects current salary levels or inflation.
Tax professionals are of the view that expanding the income limit for the 30% tax slab would provide substantial relief to middle- and upper-middle-income earners. With rising living costs, housing EMIs, education expenses, and healthcare costs, taxpayers feel the existing slab structure needs urgent revision to remain fair and realistic.
Higher Standard Deduction on the Wishlist
Another key proposal gaining traction is an increase in the standard deduction. At present, the standard deduction offers limited relief, especially considering rising inflation and work-related expenses.
Experts suggest that the standard deduction could be increased to ₹1,00,000, which would directly reduce taxable income for salaried individuals and pensioners. Such a move would be simple to implement and would immediately benefit millions of taxpayers without adding complexity to the tax system.
Simpler Capital Gains Rules Under the New Tax Law
Budget 2026 is particularly important from a policy perspective, as the Income Tax Act, 2025 is set to come into force. According to tax experts, this presents a unique opportunity for the government to streamline capital gains taxation.
Currently, capital gains rules differ across asset classes and holding periods, often confusing investors. Experts believe the new tax framework should simplify definitions, reduce unnecessary classifications, and make compliance easier. Clear and straightforward capital gains provisions would not only benefit individual investors but also encourage long-term investment and market participation.
Clarity on Old vs New Tax Regime
Despite the government’s push toward the new tax regime, many taxpayers remain uncertain about whether to opt for the old or new system. Experts stress that Budget 2026 should clearly outline the long-term direction of income tax policy.
Clear communication on whether the old regime will continue alongside the new one, or whether a gradual transition is planned, would help taxpayers make informed financial decisions and reduce confusion during return filing.
Amnesty Scheme to Reduce Tax Disputes
Another major recommendation from tax professionals is the introduction of a one-time tax amnesty scheme. Similar to earlier initiatives such as “Vivad se Vishwas,” such a scheme could help resolve thousands of pending tax litigation cases.
According to estimates, tax disputes worth nearly ₹1.5 lakh crore are currently stuck in litigation, with around 38,000 cases pending across various forums. A well-designed amnesty scheme could unlock these funds, reduce the burden on courts, and restore taxpayer confidence in the system.
Focus on Trust, Simplicity and Compliance
Over the past few years, the government has consistently emphasized ease of compliance and trust-based taxation. Experts believe Budget 2026 should continue in the same direction by removing outdated provisions, simplifying legal language, and reducing unnecessary litigation.
If the government delivers on higher deductions, slab rationalisation, simpler capital gains rules, and dispute resolution mechanisms, Budget 2026 could further strengthen taxpayer confidence while promoting voluntary compliance.
Final Outlook
As expectations build ahead of the Union Budget 2026, taxpayers are hopeful that the government will balance revenue needs with genuine relief measures. With inflation pressures still present and a new income tax law on the horizon, this budget has the potential to reshape India’s personal taxation landscape in a more transparent, taxpayer-friendly manner.
