Finance Minister Nirmala Sitharaman can take a big decision on standard deduction in Budget 2026.Image Credit source: ChatGPT
The countdown to Budget 2026 has started. Now the country’s Finance Minister Nirmala Sitharaman has less than two weeks left to present the budget. The special thing is that this time the budget is going to be presented on Sunday. In such a situation, it has been decided to open the country’s stock market on Sunday. This will be the first time that the country’s budget will be presented on Sunday and at the same time the stock market will be open. Well today it is not just about that. Rather, today the talk will be about those taxpayers who, like last time, are expecting relief this time too.
After the central government announced a huge cut in income tax rates last year to boost consumption, taxpayers across India are expecting more relief in income tax. In Budget 2025, Sitharaman made many such announcements which proved to be a boon for taxpayers and salaried people. From reduction in income tax rates to new tax slabs, Budget 2025 fulfilled many demands of the middle class.
However, this time the eyes of the taxpayers are fixed on the limit of standard deduction. Experts estimate that no change in this tax seems possible. But the government can consider the issue of standard deduction. Standard deduction can be increased from Rs 75 thousand to Rs 1 lakh. Which is being demanded a lot. Let us also tell you which 5 tax reliefs were given by the Finance Minister of the country last year and what kind of relief is being expected from them this time.
Income tax rate cut
In an unexpected announcement, Sitharaman had made income up to Rs 12 lakh tax free, which has brought considerable relief to the middle class. For salaried people, the effective limit increases to Rs 12.75 lakh after including the standard deduction of Rs 75,000. As a result, income up to Rs 12.75 lakh has become tax-free.
new tax slabs
Under the new tax regime in Budget 2025, Sitharaman also announced new slab rates.
new income tax bill
The Finance Minister also announced the new Income Tax Bill, 2025, which was later passed in the Lok Sabha. The new Income Tax Act, 2025, which is scheduled to come into force from April 1 this year, has simplified its language, removed obsolete provisions and streamlined sections for simplified provisions.
TDS rate cut
Finance Minister Nirmala Sitharaman also made several changes in the functioning of TDS (Tax Deducted at Source). The limit of TDS on rent has been increased from Rs 2.4 lakh to Rs 6 lakh, making compliance easier for small landlords. The TDS limit on interest income of senior citizens has been increased from Rs 50,000 to Rs 1 lakh.
Relief in ITR (U)
The Finance Minister announced that updated ITRs (ITR(U)) can be filed for four years instead of the earlier two years, giving taxpayers more time to update their income tax returns.
Taxpayers’ expectations in Budget 2026?
After Budget 2025, taxpayers are now looking towards Budget 2026 for further relief in income tax rules. However, experts are not expecting any important announcement on direct taxes. Richa Sawhney, partner, tax department, Grant Thornton India, says in a Mint report that given the changes made in slab rates last year and its impact on tax collections, it may not be possible for the government to make any further changes this year. However, in future, if the slab rates in the new tax regime are changed annually keeping in mind the cost of living and inflation, it could benefit a larger section of taxpayers and help make the new tax regime more popular.
Speaking to Livemint, Nishant Shah, Partner, Economic Law Practice, said that the smooth implementation of the Income Tax Act, 2025 is expected in Budget 2026. He said that with regard to direct tax, a key expectation is comprehensive tax certainty for foreign investors and smooth implementation of the new Income Tax Act, 2025. Under this, the government is reportedly considering a proposal to exempt sovereign wealth funds and other patient capital from tax on equity gains in Indian listed securities, thereby expanding the current limited exemptions that are primarily focused on infra investments. Its objective is to stem recent foreign investment (FPI) outflows and attract long-term, stable capital.
Changes in standard deduction?
On the other hand, it is expected from experts that this time the government may try to provide relief to the common people by making changes in the standard deduction. At present the limit of standard deduction is Rs 75 thousand. This means that the annual income of Rs 12.75 lakh is tax free. If the limit of standard deduction is Rs 1 lakh then the annual income of common people will be tax free up to Rs 13 lakh. Common people will get great relief. By the way, this demand was made last year also.