Taxpayers are once again looking forward to Finance Minister Nirmala Sitharaman regarding the Union Budget 2026. Over the past few years, the government has clearly indicated that its priority is to provide relief to the middle class and salaried taxpayers. The introduction of the new income tax system in 2020 and the reforms made every year thereafter have been part of this strategy. In the last budget, the government had given a big gift to taxpayers by making income up to ₹12 lakh tax-free under the new system. Now the question is, will there be any other big surprise in Budget 2026?
1. Possible change in tax slab
Experts believe that this time the government may make changes in the tax slabs under the old tax system. The tax structure in the old system has remained unchanged till now, while the new system has been made consistent and attractive. In order to boost consumption, the government can focus on providing relief to the middle-income group.
2. Will TDS rates be reduced?
Currently, multiple TDS rates are applicable on different transactions, causing confusion among taxpayers. In Budget 2026, the government may simplify TDS rates, limiting them to 2-3 slabs, which will make compliance easier.
3. Standard deduction may increase in the old system
The standard deduction has been increased to ₹75,000 in the new system, while it is still ₹50,000 in the old system. In view of rising inflation, the government may announce an increase in standard deduction in the old system also.
4. Joint taxation for husband and wife
Based on the recommendations of ICAI, the government may consider introducing a joint taxation system for spouses. This will reduce the total tax liability of the family and make the tax system more balanced.
5. Increase in LTCG tax-free limit
There may be good news for stock market and mutual fund investors. The government may increase the tax-free limit for long-term capital gains from Rs 1.25 lakh to Rs 1.5 lakh.