union budget 2026
The Finance Minister will present the Union Budget 2026 on 1 February 2026. This budget is coming between the big budget of February 2025 and the new Income Tax Act 2025 to be implemented from April 1, 2026. Therefore, it is being considered as a bridge budget from the current system to the future system, in which there will be more emphasis on trust, easy compliance and technology.
Last year, the government had increased the tax rebate by making changes in the new tax system, due to which those earning up to ₹ 12 lakh have to pay zero tax. At the same time, those with income up to ₹ 12.75 lakh got relief by getting standard deduction of ₹ 75,000 for the salaried class. For the last few budgets, the government’s focus has been to promote a new tax system that is simple and less cumbersome, which provides convenience to both taxpayers and the Income Tax Department.
Budget may emphasize on administrative reforms
This time there is little hope of any major change in tax slab or rate. The focus of the government will be on smooth transition from the old Income Tax Act 1961 to the new Income Tax Act 2025. It is expected that tax refunds will be received quickly, rules will be easy to follow and the process will be simplified.
Need to further improve the digital system
With the advent of AIS (Annual Information Statement) and TIS (Taxpayer Information Summary), tax related information has started becoming available at one place, which has made paying taxes easier. But many times there are mistakes and duplicate entries in these. Therefore, the government can work on making the digital system more transparent and trustworthy.
Transparency and trust will increase through AI
If AI is used properly, tax returns can be auto-filled, mistakes will be reduced and filing will be easier. Delay in tax refund is still a big problem. If the government brings real-time status and tracking system, the confidence of taxpayers will increase.
It is important to settle tax matters quickly
Disputes and cases related to income tax continue for a long time. It is important for taxpayers that the cases are resolved in a timely and transparent manner.
Clear rules on crypto (VDA) tax
Currently, digital assets like crypto are taxed at 30% and adjustment of losses is not allowed. Whereas in countries like America and Britain it is considered as capital gain. There may be clear and practical rules on this in Budget 2026.
Demand to defer tax on ESOP for all employees
Employees are burdened by immediate tax on getting ESOP, whereas they get the real money later. Currently this facility is available only to startup employees. If all the employees get this relief then it will be a big improvement.
It is expected from Budget 2026 that the tax system will become more simple, transparent and technology-friendly. The new income tax law is an opportunity to improve the experience of taxpayers. The government will have to strike a balance between revenue and the reality of the common people.