“Union Budget 2026 Likely to Introduce Major Changes to Old Tax Structure”
Taxpayers Eye Simplification, Slab Adjustments, and Standard Deduction Hikes Ahead of February 1 Budget
India, Jan 14 : With Union Budget 2026 just weeks away, expectations are building among individual taxpayers, particularly regarding potential reforms in the personal income tax structure. Finance Minister Nirmala Sitharaman is set to present her ninth consecutive budget on February 1, continuing a reform focused approach that has emphasized tax simplification, predictability, and transparency in recent years.
Focus on Tax Simplification
The government has consistently aimed to streamline taxation, shifting away from complex exemptions towards simplified slabs and easier compliance. The upcoming budget is widely expected to further this trajectory, with taxpayers keen to see if additional measures will be introduced to make personal taxation simpler and more predictable.
The Rise of the New Tax Regime
Introduced a few years ago, the new income tax regime marked a structural change in tax planning. By offering lower tax rates in exchange for giving up most exemptions, it appealed to individuals preferring flexibility in spending over locking funds in tax-saving instruments. Recent updates, such as higher standard deductions, raised tax-free thresholds, and revised slabs, have strengthened the regime’s appeal, particularly for salaried professionals and middle-income households.
Shifting Taxpayer Preferences
Taxpayer behaviour indicates a growing preference for the new regime, reflecting ease of compliance, lower administrative burden, and predictable calculations. Younger professionals and those without extensive investment-linked deductions have increasingly opted for the simplified regime.
Old Tax Regime: Limited Changes
In contrast, the old tax regime has seen limited updates in recent years. While it still provides deductions for savings, insurance, and housing loans, the thresholds remain largely unchanged. This has reduced its relative attractiveness for taxpayers without substantial tax-saving investments.
What to Expect from Budget 2026
Experts suggest that the government may gradually encourage migration to the new regime rather than immediately phasing out the old system. Any adjustments to slabs, standard deductions, or compliance rules could significantly influence tax planning for the coming year. Taxpayers will be closely watching Budget Day for clarity on which regime best aligns with their income, investments, and long-term financial goals.
