As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026 tomorrow, February 1, at 11 AM, the nation is bracing for what could be a historic announcement. This will be her ninth consecutive budget, delivered on a rare Sunday session, as India aims to maintain its position as the world’s fastest-growing major economy.

The middle class and salaried taxpayers, encouraged by the “mega boost” provided in the previous budget, are eagerly watching for further tax relief. With the New Income Tax Act, 2025, set to take effect on April 1, tomorrow’s speech is expected to provide the final roadmap for personal finance in the coming fiscal year.

Budget 2026

The Economic Survey 2025-26, tabled just yesterday, has set an optimistic tone. It projects India’s economy to grow between 6.8% and 7.2% in FY27.

While the Survey describes India as an “oasis of macroeconomic stability,” it also warns of a 10-20% chance of a systemic shock due to global geopolitical tensions. This suggests the Finance Minister must balance the demand for tax cuts with the need for fiscal prudence and “strategic sobriety”.

Hike in Standard Deduction

The most widespread expectation among salaried employees is a significant increase in the standard deduction. Currently, this stands at ₹75,000 under the new tax regime.

• Proposed Change: Experts suggest the deduction could be raised to ₹1 lakh.
• The Benefit: If implemented, this would effectively make income up to ₹13 lakh tax-free for salaried individuals.
• The Rationale: A higher deduction helps taxpayers cope with inflation and increases personal disposable income to spur consumer sentiment.

Middle-Income Gap

Currently, the tax rate jumps significantly as income rises. Experts have proposed the addition of a graduated 25% tax band for net income between ₹30 lakh and ₹50 lakh. This would provide relief to upper-middle-income earners who currently face a steep climb to the 30% bracket.

Another recommendation involves expanding the trajectory of the peak tax rate. Some economists suggest that the 30% tax rate should only apply to income above ₹30 lakh, rather than the current ₹15 lakh threshold in the new regime, to reflect expanding GDP and rising individual incomes.

Old Tax Regime

Despite the government’s push for the new tax regime, approximately 26% of filers continue to use the old regime. This is largely because their financial lives are anchored in legacy benefits like House Rent Allowance (HRA) and home loans.

For these taxpayers, there is hope for a revision of limits under Section 80C. Increasing these limits would ease pressure on personal finances for those who rely on traditional savings instruments to build long-term wealth.

Capital Gains and TDS

Investors are looking for a more harmonized capital gains framework to simplify the current complex system of multiple rate slabs.

1. Uniformity: Reducing disparities between listed and unlisted securities, as well as debt instruments.
2. Exemptions: Potentially increasing the long-term capital gains deduction threshold for listed securities.
3. TDS Rationalization: Last year, the TDS on rent limit was hiked to ₹6 lakh; this year, taxpayers hope for further reductions in compliance burdens for marginal investors and small landlords.

GST and Insurance

The Economic Survey highlighted recent reforms where life and health insurance premiums were made GST-exempt. Tomorrow, the focus may shift to other essential services. For instance, education sector leaders are urging a reduction in the 18% GST on educational services to make quality learning more accessible.

Budget 2026 Expectations

Most analysts, including those from Anand Rathi, expect the government to stick to the existing reform path without major “shocks”. The priority will likely remain on infrastructure capex, which is expected to rise by 13% to 15% to support long-term growth.

However, given the Prime Minister’s recent signal that the government is on a “reform express,” a few bold decisions to boost consumption cannot be ruled out. Whether through a higher standard deduction or rationalized tax bands, the goal will be to empower the middle class as the primary driver of India’s journey toward becoming a Viksit Bharat.

Budget 2026 will be presented at 11:00 AM on Sunday, February 1.

The Logical Indian’s Perspective

As India anticipates Budget 2026, we advocate for a human-centric approach that prioritizes empathy and social harmony. Beyond necessary middle-class tax relief, true progress lies in uplifting the 40% of gig workers currently struggling with low wages and income volatility.

We encourage dialogue focused on equitable investment in education and healthcare to ensure sustainable coexistence. By fostering kindness through policy, the government can drive positive social change and build a more peaceful, inclusive nation.