Budget 2026 income tax expectations: LTCG, STCG, STT, 87A relief expected by taxpayers
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5 min read | Updated on January 31, 2026, 10:13 IST
SUMMARY
In the lead-up to Union Budget 2026-27 on February 1, this blog highlights top expectations on income tax slabs and rules, on January 30, 2026. Please note that the expectations published here are those of various industry bodies and experts. Finance Minister Nirmala Sitharaman will present the Budget Speech on February 1, and she may or may not accept any of these suggestions.
Budget 2026 to be presented on February 1, 2026.
Budget 2025 tax expectations live coverage on January 30 ends
The live coverage of the Union Budget tax expectations on January 30 has concluded. Live coverage on January 31, 2026 continues here.January 31, 2026, 10:13 AM
Budget 2026: Make gifts up to ₹1.5 lakh tax-free, suggests expert
Under the current tax rules, gifts worth over ₹50,000 are subject to taxation as 'Income from Other Sources'. This limit has not been increased since 2006. Ahead of Budget 2026, a tax expert says the tax-free limit for gifts should be increased to at least ₹1.5 lakh. Read detailsJanuary 30, 2026, 13:59 PM
Budget 2026 Income Tax expectations Live: Capital gains relief on investors' wishlist
Ahead of Budget 2026, stock market investors and experts are holping for a relief on the capital gains front from the government. Aditya Agrawal, CFA, Chief Investment Officer at Avisa Wealth Creators, says Budget 2026 is expected to be pivotal for financial markets, with a focus on stability and tax parity. Key expectations include steps to improve investor sentiment by reducing LTCG tax to 10% and rolling back STT to encourage higher FII participation. Read moreJanuary 30, 2026, 12:36 PM
Budget 2026 Income Tax expectations Live: BSE, MCS, AMFI, ARIA, CPAI seek STT relief
Weeks before Budget 2026, capital market players, including BSE, Multi-Commodity Exchange (MCX), Association of Mutual Funds in India (AMFI), ARIA, CPAI, urged the finance minister to reduce Securities Transaction Tax (STT) on cash market trades in Budget 2026. STT is a direct tax levied on every sale and purchase of securities listed on stock exchanges in India. The STT is levied over and above the transaction value. Read details hereJanuary 30, 2026, 12:36 PM
Budget 2026 Income Tax expectations Live: AMFI suggests Section 87A rebate on LTCG, STCG
The Association of Mutual Funds in India (AMFI) says that not allowing Section 87A rebate on equity gains leads to a disparity for salaried, middle-class taxpayers. It has suggested amending Section 87A of the Act (section 156 of the Bill) to allow the rebate of ₹60,000 to be applied after computing tax on special rate incomes (such as capital gains), provided the total income (including such gains) does not exceed ₹12 lakh. Read moreJanuary 30, 2026, 12:31 PM
Budget 2026 Income Tax expectations Live: LTCG relief after property sale, ICAI suggests
ICAI has suggested extending time limit up to the due date of filing return of income for investing in specified bonds for capital gains tax exemption after selling land or building.
Currently, under section 85, long-term capital gains from transfer of land or building or both is exempt, if such gains are re-invested in bonds, redeemable after five years issued by NHAI or RECL (or any other notified bond) within 6 months after the date of such transfer.
"It is suggested to amend section 85 so that time limit for investment in specified bonds may be allowed upto the due date of filing of return of income under section 263(1)," ICAI said in its pre-budget memorandum.
January 30, 2026, 12:28 PM
Budget 2026 Income Tax expectations Live: Middle class expect more relief
After the blockbuster Budget 2025, taxpayers' expectations from Finance Minister Nirmala Sitharaman have grown manifold as we head towards another Budget presentation on February 1, 2026. Some experts believe the government already stretched its fiscal space in 2025 due to personal income tax and GST rate cuts, and that any major tax relief may be on hold for now. However, many other experts and industry bodies argue that there is still room for improvements to various tax provisions rather than another round of major rate cuts. Here's a list of top 15 expectations of the middle-class and salaried from Budget 2026
January 30, 2026, 11:30 AM
Budget 2026 Income Tax expectations Live: Eco Survey highlights need to generate sufficient interest
"Only the degree and the duration will vary. In a world of geopolitical turbulence, this may not be confined to a year but could be a more enduring feature. In response, India needs to generate sufficient investor interest and export earnings in foreign currency to cover its rising import bill, as, regardless of the success of indigenisation efforts, rising imports will invariably accompany rising incomes. This has been the historical global experience," Economic Survey 2026 says.
January 30, 2026, 11:27 AM
Budget 2026 Income Tax expectations Live: Know the difference in New and Old Regimes for AY 2026-27
The Budget 2025 introduced enhanced income tax slab rates under the new tax regime, thus increasing the basic exemption limit to ₹4 lakh. In the old tax regime, the basic exemption is ₹2.5 lakh for people aged below 60. For resident senior citizens, it is ₹3 lakh and for super senior citizens aged above 80 years, the basic exemption limit increases to ₹5 lakh. Read all details hereJanuary 30, 2026, 10:13 AM
Budget 2026 Income Tax expectations Live: ITR due date extension suggested
The Institute of Chartered Accountants of India (ICAI) has recommended extending the time limit for filing belated and revised income tax returns, citing that the current window is too short for taxpayers to identify and correct errors. It says, "“As per section 263(4), if any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any tax year at any time within nine months from the end of the relevant tax year, or before the completion of the assessment, whichever is earlier.” Read moreJanuary 30, 2026, 09:55 AM
Budget 2026 Income Tax expectations Live: Experts suggest higher tax threshold for ULIP premiums
Finance Act 2021 made maturity proceeds ULIPs taxable as equity mutual funds if the premium is over ₹2.5 lakh. However, no tax applies if a nominee receives the amount after the subscriber's demise. As Budget 2026 approaches, experts at the Bombay Chambers of Commerce and Industry (BCCI) have suggested raising the taxable premium threshold to up to ₹10 lakh. Read full detailsJanuary 30, 2026, 08:36 AM
Budget 2026 Income Tax expectations Live: ICAI recommends joint taxation for couples
ICAI has suggested introducing an option joint taxation system for married couples. Currently, many Indian families rely on a single earning member, making the current basic exemption limit inadequate.
"Consequently, there may be a tendency to explore ways and means to generate income for each family member to take advantage of individual exemption limits," ICAI says.
There fore ICAI suggests, "Married couples may be given an option to pay tax jointly by filing a single return of income. Current basic exemption limit, tax slabs and surcharge slabs may be proportionately doubled in the Joint Taxation System."
January 30, 2026, 08:01 AM
