For Budget 2026, experts have suggested modifying the current provisions for deferral of perquisite tax payable on exercise of ESOPs. They have suggested deferring the payment of perquisite tax on ESOPs offered by any employer of all sectors without any qualifying conditions, whose securities are not listed, till the earliest of the following:

• 8 years from the date of exercise; or

• Liquidity event in respect of securities offered under ESOP, or

• Sale of securities acquired under an ESOP.

ICAI experts have suggested amending Section 247 (1) of the Income Tax Act, 2025 to allow access to only official emails during search and seizure operations. This will help protect the fundamental right to privacy of a person.

The current provision allows an authorised officer to inspect any information, electronic records and communication available on computer systems, including emails and social media.

Medical inflation continues to be one of the biggest challenges facing India’s healthcare system, projected at 11.5%–14%, among the highest in Asia, according to Srikanth Kandikonda, Chief Financial Officer at ManipalCigna Health Insurance.

He says that policy measures that encourage preventive healthcare can significantly lower long-term treatment costs. Industry reports indicate that preventive care reduces hospitalisations and improves health outcomes.

"Introducing separate and enhanced tax benefits for OPD services and preventive health screenings, beyond the current limits under Section 80D, would encourage wider adoption of preventive care," says Kandikonda.

"With India’s ageing population and rising burden of chronic diseases, a prevention-led approach, supported by budgetary reforms, can play a critical role in improving health outcomes in the country,” he adds.

Market bodies, including BSE, MCX, AMFI, and the Association of Registered Investment Advisers, have reportedly pitched for a reduction in Securities Transaction Tax (STT) on cash market trades.

Another key demand is the reduction of Long-Term Capital Gains (LTCG) tax on equities to 10%, a move expected to further incentivise long-term investments and improve overall market sentiment.

Rahul Bhutoria, Director and Co-founder of Valtrust, says: "When we approach budget 2026, one reform that can meaningfully strengthen the Indian capital market could be to restore tax parity for debt mutual funds and extend the same equity-like tax treatment to AIF."

Explaining the above, he says, "When indexation benefit for debt mutual funds was removed in March 2023, there was an immediate impact. Thus, it clearly shows that how sensitive long-term capital is to tax policy. After the announcement of March 2023, long-term investors stepped back, leading to weakening of inflows. The attractiveness for debt has reduced at a time when India needs a stable long-term funding. Hence, restoring tax parity will not only bring household and HNI capital back into debt funds, but it'll also deepen the bond market liquidity and provide critical financing for corporate, for private trade, as well as infrastructure."

Ahead of Budget 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 argue that there is still room for improvements to various tax provisions rather than another round of major rate cuts. Here are some top expectations from Budget 2026, as per experts and industry bodies.

Ahead of Budget 2026, salaried taxpayers do not have to pay tax if they are earning up to ₹12 lakh annually, roughly ₹1 lakh per month excluding special income like capital gains and standard deduction. Technically, the tax-free threshold rises to ₹12.75 lakh due to the standard deduction of ₹75,000.

New tax regime (Effective April 1, 2025)

Income up to ₹4 lakh: Nil

₹4–8 lakh: 5%

₹8–12 lakh: 10%

₹12–16 lakh: 15%

₹16–20 lakh: 20%

₹20–24 lakh: 25%

Above ₹24 lakh: 30%

Old tax regime rates

₹2.5 lakh: Nil

₹2.5–5 lakh: 5%

₹5–10 lakh: 20%

Above ₹10 lakh: 30%

Several experts and industry bodies have urged the government to increase the standard deduction limit for salaried employees under Section 19 of the Income Tax Act 2025. Currently, the standard deduction is capped at ₹75,000 under the new tax regime and ₹50,000 under the old regime. Experts suggest increasing it to ₹1.5 lakh or at least ₹1 lakh

No big change in Income Tax slabs is expected in Union Budget 2026. Finance Minister Nirmala Sitharaman already revised tax slabs under the new tax regime in Budget 2025, enabling zero tax for individuals having income below Rs 12 lakh. Therefore, another change in just one year is not expected. While there was no change in tax slabs under the old regime, not much is expected even this year as the old regime is already on its way out with increasing adoption of the new regime. However, experts still believe there may be some fine-tuning of existing rules for the benefit of taxpayers in Budget 2026.

Aligning the tax treatment of insurance annuities with other pension instruments, such as taxing only the returns on annuity payouts and extending comparable deductions, would allow individuals to choose retirement products based on suitability rather than tax differences, says Tarun Chugh, Managing Director and Chief Executive Officer, Bajaj Life Insurance.

He further suggests that bringing parity in taxation between traditional and unit-linked life insurance policies can simplify the tax framework and encourage disciplined, long-term wealth creation alongside protection.