Ahead of Union Budget 2026-27, India’s middle class is seeking tax relief, including higher standard deductions, revised tax slabs, and better benefits for health insurance and savings.
As the Union Budget 2026-27 approaches, India’s middle class is vocalising clear expectations from Finance Minister Nirmala Sitharaman, emphasising the need for tax relief that genuinely addresses rising living costs and economic pressures at the household level.
Middle-income earners, broadly defined as those earning between ₹5 lakh and ₹30 lakh per annum, already contribute a large share of direct taxes but feel increasingly strained by inflation, stagnant slab ceilings and a lack of real disposable income growth.
One of the primary demands ahead of Budget 2026 is meaningful revisions in the personal income tax structure, especially in terms of higher standard deductions and rationalised tax slabs that reflect actual cost-of-living increases.
Experts and taxpayers alike are urging an increase in the standard deduction under the new tax regime from the current ₹75,000 to ₹1 lakh or beyond, which would immediately boost take-home pay for millions of salaried individuals. There is also a push to raise the tax-free income threshold and fine-tune slab rates, particularly in the ₹12-20 lakh range, to ease the burden on upper-middle-income families.
Beyond headline rate cuts, many middle-class households are calling for enhanced relief under key sections like Section 80D (health insurance) and expanded incentives for long-term savings — all aimed at offsetting rising medical and education costs. Simplification of compliance and clearer guidelines on choice between old and new tax regimes are also part of the broader wishlist, as complexity has been a recurring source of frustration for taxpayers.
The sentiment among many taxpayers, as highlighted by experts, is that the system should move closer to taxing net savings rather than gross income, recognising unavoidable everyday expenses that cut into real disposable income.
Some analysts have even pointed out that the current flat standard deduction fails to reflect modern living costs, arguing for a percentage-based deduction structure to bring fairness to the tax process.
While sweeping reforms are not guaranteed, there is a broad expectation that Budget 2026 will blend fiscal prudence with targeted relief measures to support consumption, ease financial pressures and stimulate growth. This includes not just income tax relief, but incentives for savings, healthcare, education and home ownership — all aimed at strengthening the economic confidence of India’s middle class.