As the Union Budget 2026-27 approaches, tax experts expect the government to offer meaningful relief for middle-class taxpayers while keeping the direct tax framework stable and easier to comply with ahead of the rollout of the Income-tax Act 2025 from April 1, 2026. Industry professionals have outlined comprehensive expectations focusing on higher exemptions, simplified compliance, and predictable tax rules.

Higher Basic Exemption and Standard Deduction Take Priority

CA Deepak Ukidave, Adjunct Faculty (Finance & Law) at K J Somaiya Institute of Management, emphasized that the Budget should raise the basic exemption limit from ₹6 lakh for salaried employees. He noted that the new tax regime has removed most popular deductions and exemptions under the old regime, including Section 80C and Section 80D medical insurance premium deduction, which has discouraged investments in traditional tax-saving instruments.

Nehal Mota, Co-Founder & CEO of Finnovate, suggested the Budget may consider raising the standard deduction to ₹1 lakh to help salaried taxpayers manage rising living costs. Financial educator Sakchi Jain also called for meaningful tax relief through higher standard deduction and fairer slabs.

Housing, Health and Retirement Benefits Draw Focus

Experts flagged the need to strengthen deductions and benefits linked to housing, retirement and medical costs. CA Akshay Jain, Direct Tax Partner at NPV & Associates LLP, outlined specific expectations for taxpayers under the old regime, including higher home loan interest deduction and enhanced NPS contributions.

Mota suggested allowing home loan interest deduction for self-occupied property under the new regime, citing affordability pressures and the push for home ownership. He also proposed a higher TDS threshold for senior citizens on interest income and additional health insurance relief given medical inflation.

Capital Gains Tax Simplification Remains Key Priority

Several market-linked professionals pushed for a simpler, 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.

Vinayak Magotra, Product Head & Founding Team at Centricity WealthTech, noted that domestic retail investors seek confidence that the rules won't keep changing, particularly on equity taxation. He highlighted potential reforms including STT rationalization, buyback taxation efficiency, and restoring indexation benefits for debt mutual funds.

Fixed-Income and Mutual Fund Tax Efficiency

Nikhil Aggarwal, Founder & Group CEO of Grip Invest, said Budget 2026 can accelerate bond adoption by improving liquidity and reducing friction through better market-making frameworks. He noted that long-term bond investing remains constrained by tax asymmetries such as slab-rate taxation on interest, TDS inefficiencies and unfavorable capital gains treatment.

Swapnil Aggarwal, Director at VSRK Capital, explained that AMFI's Budget wishlist aims to remove tax inefficiencies and improve mutual funds as long-term investment options. Proposals include restoring indexation benefits for debt funds, tax equality for REITs/InvITs, and capital gains simplification to improve after-tax outcomes.

Income-Tax Act Transition and Compliance Concerns

With the Income-tax Act 2025 coming into force from April 1, 2026, several professionals called for clarity on transition rules and taxpayer guidance. Tax professionals also sought rationalization of TDS and TCS rates to reduce compliance friction and improve cash flows.

Amit Amlani, Executive Director – Direct Tax at Nexdigm, said Budget 2026 should mark a shift toward predictable and principled reform, with rationalization in personal taxation and simplification of enforcement-related processes, including foreign asset disclosure clarity. Ashish Nasa, MD & CEO of Universal Trustees, urged caution on inheritance or estate tax discussions, warning that sudden measures could disrupt family-owned enterprises and long-term capital formation.

Job creation has emerged as the top priority for the upcoming Budget 2026, according to a comprehensive survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI). The survey, which polled 100 companies, provides crucial insights into industry expectations as Finance Minister Nirmala Sitharaman prepares to present the budget on February 1.

Key Budget Priorities Identified

The FICCI survey reveals a clear hierarchy of priorities that businesses want the government to address in the upcoming budget:

Sectoral Focus Expectations

Respondents have clear expectations about which sectors will receive maximum government attention in Budget 2026. Over half of all survey participants believe infrastructure development will be the primary focus area, reflecting the sector's critical role in economic growth.

Export Support Measures in Demand

With global trade facing significant disruptions, particularly due to tariff regimes initiated by major economies, export support has become a critical concern for Indian businesses. The survey identifies specific measures that companies believe will help ease stress on exporters:

Customs Process Improvements

The survey delves deeper into what improvements in customs processes should entail, with respondents providing specific recommendations:

• Easier regulations: Supported by 90% of respondents
• Lower duties: Backed by 69% of participants
• Greater digitisation: Favored by 59% of companies
• Faster rulings and dispute resolution: Desired by 46% of respondents

These findings reflect the business community's focus on operational efficiency and cost reduction in international trade operations. The emphasis on digitisation and streamlined processes indicates industry recognition of technology's role in improving trade facilitation.

Industry Outlook

The FICCI survey underscores the private sector's expectations for Budget 2026 to address both immediate challenges and long-term growth drivers. The prioritization of job creation reflects ongoing concerns about employment generation, while the focus on infrastructure and manufacturing aligns with broader economic development goals. The significant attention to export support measures highlights the need for policy interventions to maintain India's competitiveness in global markets amid evolving trade dynamics.