What middle-class India expects from Budget 2026
What's the story
As the Union Budget 2026-27 draws near, tax experts are hoping for significant relief for middle-class taxpayers. They want the government to keep the direct tax structure stable and easy to comply with, especially with the new Income-tax Act, 2025, coming into effect from April 1, 2026. The key expectations include raising basic exemption limits and standard deductions, simplifying tax slabs, easing compliance processes, and ensuring stability in capital gains taxation and long-term savings rules.
Tax relief
Experts propose increased exemption limits and standard deductions
CA Deepak Ukidave, a finance and law adjunct faculty at K J Somaiya Institute of Management, suggested that the Budget should raise the basic exemption limit for salaried employees. He noted that the new tax regime has removed most popular deductions and exemptions under the old regime. Nehal Mota, co-founder and CEO of Finnovate, also proposed raising the standard deduction to ₹1 lakh to help salaried taxpayers cope with rising living costs.
Stability focus
Tax stability and long-term financial resilience
Pune-based financial mentor Kirang Gandhi stressed that Budget 2026 should focus on long-term financial resilience instead of short-term tax relief. He called for higher basic exemptions, rational taxation, and stronger retirement and health safeguards to protect the middle class. Vinayak Magotra, product head at Centricity WealthTech, echoed this sentiment by saying domestic retail investors want assurance that "the rules of the game won't keep changing," especially regarding equity taxation.
Deduction enhancement
Experts call for enhanced deductions and benefits
Experts have also called for enhanced deductions and benefits related to housing, retirement, and medical expenses. CA Akshay Jain of NPV & Associates LLP suggested that major slab changes in Budget 2026 may be less likely after last year's relief. However, he still expects an increase in standard deduction and faster compliance processes. Jain also proposed higher home loan interest deduction from ₹2 lakh to ₹3 lakh and NPS deduction from ₹50,000 to ₹1 lakh under the old regime.
Tax simplification
Simplification of capital gains tax structure
Several market-linked voices have called for a simplified, more predictable capital gains tax structure that supports long-term investing. Jugal Mantri, director and CEO of Anand Rathi Global Finance, said the Budget should adopt simplified and progressive personal tax slabs and enhance deductions for housing, savings, and insurance. He also suggested reducing capital gains taxes to promote domestic market participation while ensuring a level playing field for foreign investors.
Investment friction
Tax friction in fixed-income investing and bonds
Nikhil Aggarwal, founder and group CEO of Grip Invest, said Budget 2026 can boost bond adoption by improving liquidity and reducing friction through better market-making frameworks. He also noted that long-term bond investing is hampered by tax asymmetries such as slab-rate taxation on interest, TDS inefficiencies, and unfavorable capital gains treatment. He suggested rationalizing these to improve household participation in fixed-income investing.
Wishlist
AMFI's wishlist for Budget 2026
Swapnil Aggarwal, director at VSRK Capital, said AMFI's Budget wishlist seeks to remove tax inefficiencies and improve mutual funds as long-term investment options. He proposed restoring indexation benefits for debt funds, tax equality for ReITs/InvITs, and capital gains simplification. Aggarwal also suggested retirement-focused products like pension-style mutual fund schemes could channel household savings into productive financial assets.
Compliance concerns
Clarity on transition rules and taxpayer guidance
With the Income-tax Act, 2025, coming into effect from April 1, 2026, several professionals have called for clarity on transition rules and taxpayer guidance. Tax professionals have also sought rationalization of TDS and TCS rates to reduce compliance friction and improve cash flows. Amit Amlani of Nexdigm said Budget 2026 should mark a shift toward predictable reform with rationalization in personal taxation and simplification of enforcement-related processes.