Budget 2026: From Tax Relief To Housing Support, What Salaried Taxpayers Want This Year

As India prepares for the presentation of the Union Budget 2026–27 by Finance Minister Nirmala Sitharaman on February 1, 2026, the salaried class is once again lining up a set of expectations that reflect broader concerns about taxation, disposable income, inflation pressures, housing costs and modern workforce challenges. After significant tax relief measures introduced in the 2025 Budget, middle-income earners and professionals are seeking further structural tweaks to ease financial burdens and boost take-home pay.

1. Continued Income Tax Relief And New Regime Enhancements

a) Higher Exemption Threshold & Slab Revisions - One of the foremost demands from salaried taxpayers is a higher basic exemption limit under both the old and new tax regimes. “Expectations include widening tax slabs so that individuals with modest incomes pay less or no tax - a move that would increase disposable income and stimulate consumption,” says Rajarshi Dasgupta, Executive Director - Tax, AQUILAW.

b) More Attractive New Tax Regime - Salaried workers continue to push for the new tax regime to be made more lucrative. Suggestions include:

* Increasing the standard deduction further (beyond Rs 75,000) to compensate for inflation and rising living costs.

* Introducing rationalised slabs so that middle-income earners face lower effective rates across brackets.

* Potential tweaks like introducing an intermediate slab (e.g., 20–25 per cent for mid-range incomes) to smooth progression for upper-middle class taxpayers.

Experts argue that such reforms will help maintain the new regime’s appeal while ensuring current taxpayers do not face sudden jumps in liability as incomes rise.

2. Standard Deduction & Inflation-Linked Relief

a) Despite tax slab adjustments in the 2025 Budget, many feel that the standard deduction has not kept up with inflation, especially in urban centres. Voices within the financial community have recommended increasing this deduction - potentially up to Rs 1 lakh - to offer more immediate relief to salaried households struggling with rising prices for essentials like food, fuel, rent and education.

b) Additionally, taxpayers are pushing for inflation-linked rationalisation of key deductions across schemes such as:

* Health insurance premiums – current Section 80D limits are seen as inadequate in the face of high medical inflation; higher caps for families and senior dependents are being suggested.

* Retirement savings (NPS and other plans) – dedicated higher deduction limits to promote self-funded pensions.

* Home loan interest deductions – with property prices and interest rates high, many argue the current caps no longer reflect actual burdens faced by homebuyers.

3. Simplify TDS and Double Taxation Relief

a) A newer concern for the salaried class - particularly professionals with foreign income - has been the double taxation that arises from the current TDS framework. “Under existing rules, tax is deducted at source without factoring in Foreign Tax Credit (FTC) where income has already been taxed abroad. Salaried employees report a temporary loss of take-home pay and delayed refunds as they must wait until filing their returns to claim credit. The Budget should address this by allowing employers to adjust FTC at the TDS stage itself, reducing cash-flow stress for globally mobile workers,” says Dasgupta.

4. Housing Affordability & Loan Relief

Homeownership remains a key priority for the middle class. Expectations around housing include:

a) Revising “affordable housing” criteria to reflect current market prices so more buyers can benefit from concessional GST and loan benefits.

b) Incentives or tax breaks tied to first-time home purchases or lower-income urban dwellers.

c) Rationalised GST on housing inputs to bring down construction costs.

“Lowering upfront costs and easing loan burdens are cited as critical in making homeownership more accessible to salaried families,” says Dasgupta.

5. Faster Refunds & Ease of Compliance

Timelier tax refunds and smoother compliance mechanisms are high on the wish list. The salaried class wants:

a) Modernised, data-driven tax administration that cuts waiting periods for refunds.

b) Simplified forms and digital processes that reduce paperwork and the need for professional help.

c) Greater clarity and predictability in TDS procedures, especially where multiple income components like bonuses, stock compensation, and overseas assignments are involved.

Easing these process bottlenecks will boost taxpayer confidence and reduce anxiety around end-of-year filings.

6. Broader Economic Relief Tied to Salaried Expenses

Beyond pure taxation, there’s growing demand for the Budget to address everyday financial pressures through:

a) Subsidies or concessions on essential commodities to counter persistent inflation pressures.

b) Support for child education costs, including tax incentives for tuition and skill development programs.

c) Healthcare cost assistance, possibly through targeted benefits in public health insurance or lowered GST on insurance premiums.

These measures are seen as complementary to direct tax reforms, helping raise real disposable income for households.

Outlook Ahead of Budget Day

With fiscal prudence still a priority for the government, analysts expect targeted relief over sweeping rate cuts. “The challenge for policymakers will be striking the right balance between encouraging consumption and maintaining revenue for essential public services. Many salaried taxpayers are hopeful that the Union Budget 2026 will lean toward enhanced tax relief, inflation-adjusted deductions, and administrative simplifications that tangibly improve financial well-being,” observes Dasgupta.

In Summary:

From enhanced exemption thresholds and inflation-aligned deductions to long-overdue procedural reforms and targeted relief for cross-border professionals, the salaried class is calling for a Budget that meaningfully lowers tax incidence, acknowledges cost-of-living pressures, and streamlines compliance. As India advances toward a modernised tax framework under the proposed Income-tax Act, 2025, Budget 2026 has the potential to become a defining inflexion point in shaping equitable and predictable tax outcomes for millions of working professionals.