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.