Income tax expectations of 10 experts from Budget 2026

Income tax remains one of the most closely watched things in every Union Budget, and Budget 2026 is no different. With household expenses rising and wage growth remaining uneven, expectations are particularly high among salaried and middle-class taxpayers.

1. Higher Standard Deduction and NPS relief

Pankaj Mathpal, MD & CEO, Optima Money Managers, expects targeted relief for salaried taxpayers and retirees.

“The standard deduction should be increased from ₹75,000 to ₹1 lakh to provide meaningful relief to salaried taxpayers,” he said.

Mathpal also called for reforms in retirement taxation. “The current NPS rules allow 80% withdrawal after attaining 60 years of age, but only 60% is tax-free. The tax-free limit should be increased to 80% to encourage retirement savings,” he added.

In addition, he suggested raising the exemption limit for long-term capital gains (LTCG) to ₹1.5 lakh.

2. Rationalising presumptive taxation for professionals

Abhishek Soni, CEO & Co-founder, Tax2win, highlighted the need to update presumptive taxation norms.

“The presumptive taxation scheme under Section 44ADA requires professionals to declare 50% of gross receipts as income, which no longer reflects today’s cost structure. Reducing this to 40% would better align with actual margins,” he said.

3. Home loan benefits under the new tax regime

The absence of home loan deductions under the new tax regime continues to be a concern.

“Homeownership should not become tax-inefficient under a simplified regime. Allowing limited home loan benefits under the new regime would support first-time buyers and balance both regimes,” Soni said.

4. HRA relief

Archit Gupta, Founder and CEO of ClearTax, called for revisiting HRA rules.

“Including more developed cities in the metro category would make the HRA exemption more equitable. Today’s urban reality goes far beyond the four traditional metro cities,” he said.

Currently, metro city employees get an HRA exemption of up to 50% of their basic salary, while non-metro employees are capped at 40%.

5. Special relief for senior citizens

Experts believe senior citizens need differentiated treatment under the new tax regime.

“Senior citizens face higher healthcare expenses. A higher basic exemption limit and allowing medical deductions beyond Section 80D under the new regime would provide real relief,” said Soni.

Mumbai-based tax expert Balwant Jain echoed this view. “A differentiated tax system with higher exemption limits or lower rates for those aged 60 and above would make taxation fairer,” he said.

Ronak Morjaria, Partner at ValueCurve Financial Services, also advocated separate tax slabs for senior citizens.

6. Simplifying TDS structure

The Institute of Chartered Accountants of India (ICAI) has suggested rationalising the TDS framework. At present, there are six TDS rates ranging from 0.1% to 20%.

ICAI has proposed reducing this to just **two rates—1% and 5%—**to simplify compliance and reduce disputes.

7. No 'big bang' income tax announcements

Some experts caution against expecting dramatic changes.

“The government has already taken steps such as income tax cuts, GST rationalisation, the 8th Pay Commission and rate cuts to boost consumption. Given fiscal consolidation, Budget 2026 is likely to be more of a business-as-usual budget without big bang announcements,” said Alekh Yadav, Head of Investment Products at Sanctum Wealth.

8. Relief for capital market investors

Aditya Agrawal, CIO, Avisa Wealth Creators, expects reforms aimed at boosting investor sentiment.

“Key expectations include reducing LTCG tax to 10% and rolling back STT to encourage higher FII participation. There is also a strong case for tax parity for debt instruments and structured products currently taxed at marginal rates exceeding 40%,” he said.

9. Middle-class tax relief

“With stagnant wages and rising costs of housing, education and healthcare, taxpayers expect higher exemption limits, enhanced standard deductions and rationalisation of tax slabs,” he said.

There is also demand for higher deductions on provident fund contributions, insurance premiums and home loan interest to promote long-term savings.

10. Gold, income tax refunds and market expectations

Deloitte India has recommended introducing a real-time income tax refund tracking dashboard on the taxpayer portal to improve transparency.

Meanwhile, gold industry expectations also feature on the wishlist. “With gold prices elevated, measures like small-ticket EMI options and a review of the 3% GST structure could support demand. Policy focus on mobilising household gold holdings can unlock long-term economic value,” said Suvankar Sen, MD & CEO, Senco Gold.

From a market perspective, Rajesh Singla, CEO & Fund Manager – Alpha AIF, said investors are bracing for a stable budget. “Markets are not expecting headline surprises. Post-Budget, a final 25 bps RBI rate cut appears likely, followed by a pause,” he said.