What relief can be expected on the income tax front in Budget 2026) to be presented on February 1? This is the biggest question today. (Image X @MeghUpdates)
New Delhi: What relief can be expected on the income tax front in the country's budget (Budget 2026) to be presented on February 1? This is the biggest question today. In the last budget, the Finance Minister took several steps to make the new tax regime more attractive.
The scope of tax exemptions was increased so that more people would choose the new regime. Experts believe that a major relief on income tax is unlikely this time, but the government may make some announcements to further improve the new regime. This is because the old tax system still has some provisions that make it attractive.
The limited provisions for deductions in the new tax system are a major problem. Under this, taxpayers can only claim standard deductions and employer contributions to NPS, while benefits like HRA and medical insurance are not available. Experts say that including some essential deductions in the new tax regime can make it more attractive. The new system is simpler than the old one, but the lack of deduction provisions is a problem.
Nitin Baijal, Executive Director at Deloitte India, says that medical expenses are constantly increasing, and the absence of a Mediclaim deduction in the new tax system is a major issue. He also says that if the Finance Minister increases the standard deduction limit, it could provide relief. This could benefit salaried individuals who have opted for the new tax system, foregoing several exemptions. According to Vijay Maheshwari, Founder of Stocktic Capital, increasing the standard deduction to Rs 1-1.25 lakh would help compensate for inflation and improve the take-home income of salaried employees who are part of the new system. Benefits of Education Loans
According to experts, the tax benefits associated with education loans and home loans are also limited to the old tax system. Therefore, the Budget 2026 should consider bringing these under the new tax regime. They say that managing these deductions is quite easy, as they are linked to banks and formal financial institutions. Most of the information is already available through bank statements and employer systems, so compliance will not be an issue. Including such benefits could improve the practicality of the new system and attract more taxpayers.
The new tax system is still not particularly attractive for senior citizens. It does not allow for a higher basic exemption limit and health insurance deductions, even though medical expenses increase rapidly with age. Experts say there is ample scope to provide additional relief to senior citizens under the new system. Therefore, it is hoped that Nirmala Sitharaman will make some necessary provisions in this budget. The old tax regime still offers several advantages for senior citizens, which is why they prefer to remain under the old system.
Experts say that salaried employees whose salaries include HRA find the old system more appealing. Although the new regime has fewer tax slabs, it does not offer several exemptions. These include House Rent Allowance (HRA), deductions on investments under Section 80C, deductions on health insurance premiums, and deductions on interest on home loans under Section 24.
Therefore, if the government wants to make the new system more attractive, it will have to consider providing some of these exemptions. It is widely expected that the Finance Minister will make some announcement in this regard.
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