With the Union Budget 2026 set to be presented on February 1, tax reforms are expected to be a key focus for the government. Union Finance Minister Nirmala Sitharaman is likely to announce multiple taxpayer-friendly measures, continuing a trend seen over the past few years. Many experts believes that the upcoming budget will bring more reliefs which can simplify compliance and also strengthen the tax framework of the country.
Union Budget 2025 Delivered Major Relief to Taxpayers
In the last Union Budget was a milestone for the tax payers. When the Finance Minister Nirmala Sitharaman announced tax exemption for the individual having an income of Rs 12 lakh annually. This covered a whole lot of tax paying people.
Earlier budgets also introduced notable reforms. In Union Budget 2024, the government revamped capital gains taxation, providing relief to investors. Going further back, Union Budget 2020 marked the launch of the new income tax regime. To make it more attractive, the government later added a standard deduction of Rs 75,000 under the new structure.
Cryptocurrency Taxation May See Reconsideration
And this time, cryptocurrency investors could be watching closely. The tax experts suggests that the government can address the long standing issues of the crypto currency industry and the investors.
Currently India doesn’t have any cryptocurrency infrastructure, and people are trading on their own risk. Cryptocurrencies were brought under the tax net in Union Budget 2022. At that time, the government imposed a 1% Tax Deducted at Source (TDS) on transactions involving virtual digital assets (VDAs) and introduced a flat 30% tax on profits earned from crypto investments. Since then, industry stakeholders have repeatedly raised concerns and submitted their demands. There is hope that Budget 2026 could offer some form of tax relief for crypto investors.
Possible Increase in Tax-Free LTCG Limit on Equities
Another focus can be on the Long Term Capital Gain (LTCG) on the stocks and equity mutual funds. In the Union Budget 2024, the government increased the tax-free LTCG limit to Rs 1.25 Lakh per financial year.
And now the experts believe that this limit can be increased to Rs. 2 Lakh per year in the upcoming Union Budget 2026 scheduled on February 1. Currently the LTCG upto Rs. 1.25 Lakh are exempted from any taxes. And increase in this limit can bring more people investing in the equity markets and mutual fund schemes.
Higher Basic Exemption Limit Under the New Tax Regime?
Under the new tax regime, the basic exemption limit currently stands at Rs. 4,00,000, meaning any individual earning upto this amout annually do not pay tax. However, many tax experts argue that the government should increased this limit to Rs. 5,00,000.
Such a move would offer direct relief to low-income taxpayers and further strengthen the appeal of the new tax regime.
Insurance Deductions May Be Extended to the New Regime
Another significant expectation is the inclusion of insurance-related deductions under the new tax regime. At present, deductions for term life insurance premiums under Section 80C and health insurance premiums under Section 80D are available only in the old tax regime.
Tax experts believe the government may allow these deductions under the new regime as well.
