Budget 2026 Expectations: Income Tax Slabs, New vs Old Regime & Exemptions

Budget 2026 Income Tax Slabs Expectations Live: The countdown to Union Budget 2026-27 has begun and like every year, expectations among taxpayers are running high. Finance Minister Nirmala Sitharaman is set to present her ninth consecutive Budget on February 1, marking the third full Budget of Modi 3.0 regime. After the mega relief for middle-class announced in Budget 2025-26 — where annual income up to Rs 12 lakh was made tax-free under the new tax regime — taxpayers are now hoping for further income tax relief, simpler compliance and targeted benefits across segments. Budget 2026-27 Income Tax Expectations Live: What salaried taxpayers, senior citizens want For the salaried class, a key expectation from Budget 2026-27 is an increase in the basic exemption limit and also a higher standard deduction under the old tax regime. On the other hand, new tax regime taxpayers would like to see further easing of tax slabs with the highest 30% bracket being raised to Rs 30 lakh annual income. Many taxpayers also want flexibility to claim popular deductions such as Section 80C, 80D and home loan interest even while opting for lower tax slabs under the new regime. Relief on long-term capital gains (LTCG) tax, especially on equity and mutual fund investments, is another major demand to improve post-tax returns. Senior citizens are seeking a higher tax-free income limit, enhanced deductions on health insurance premiums, and increased exemption on interest income from bank deposits and small savings schemes. Simplifying income tax return filing for pensioners and those earning mainly from interest income remains a key expectation. Homebuyers are looking for an increase in the Section 24(b) deduction on home loan interest, particularly for self-occupied houses, amid rising property prices and EMIs. Additional tax benefits for first-time homebuyers and women homebuyers are also widely expected. Budget 2026-27 Income Tax Expectations Live: Demands for higher deductions, LTCG relief and easier ITR filing For women taxpayers, expectations include higher rebates, special deductions to encourage workforce participation, and incentives for long-term savings and investments. Across income groups, taxpayers are also demanding rationalisation of surcharge rates, relief from the high cess burden, and clarity on capital gains taxation. Ease of compliance remains central to Budget 2026-27 expectations. Taxpayers want simpler income tax return filing, fewer notices, faster refunds, and improved pre-filled ITR data to reduce errors. As February 1 approaches, the focus is firmly on broad-based tax relief, simplified tax laws, and measures that increase disposable income for taxpayers. Live Updates