Budget 2026: The budget, to be presented on February 1st, is expected to fulfill many of the middle class’s hopes. It is believed that this budget may increase the 80C limit and expand the scope of basic tax exemptions under the old regime.
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New Delhi. The government is preparing to give taxpayers another major gift in the budget to be presented on February 1st. After making income up to ₹12 lakh completely tax-free under the new regime, the government has now begun considering providing relief to taxpayers who are under the old tax regime. Sources say that in the upcoming budget, the government may decide to expand the scope of tax exemptions under Section 80C of the Income Tax Act. Furthermore, the limit of direct tax exemptions available under the old regime may also be increased.
Sources say that for taxpayers who choose the old tax regime, the basic tax exemption limit could be increased from ₹2.5 lakh. Currently, income up to ₹2.5 lakh is tax-free under the old regime. Furthermore, the tax exemption limit on investments under Section 80C, which is ₹1.5 lakh, could also be raised to ₹2 lakh. Its purpose is to provide tax exemption on the expenditure incurred on insurance policy premium and also on the increased expenditure on children’s education.
What are the 80C exemptions?
Even today, a large number of employed individuals opt for the old tax regime because it offers tax exemptions on a wide range of expenses. Under Section 80C of the Income Tax Act, direct tax exemptions are provided on investments in PF, PPF, home loan interest, school fees, and insurance premiums, up to Rs 1.5 lakh. Taxpayers have long demanded an increase in this deduction, but the government’s focus has been on the new tax regime. Now, speculation is rife that the scope of tax exemptions under Section 80C may be expanded in the old tax regime.
Capital gains tax will also be simplified.
Taxpayers are hoping for a simplified capital gains tax. Currently, different capital gains taxes are levied differently on different assets, causing confusion among investors. Taxpayers and experts believe that a uniform capital gains tax should be imposed on stocks, mutual funds, gold, and properties, so that there is no confusion regarding investments in different assets.
Demand for clarification on crypto as well
Investors and taxpayers are also hoping for clarification on the tax on digital assets. Currently, there is considerable confusion regarding the tax on cryptocurrency and foreign income. Taxpayers have expressed hope for clear guidelines and lower taxes on this matter. Experts believe that the upcoming budget will provide taxpayers with simpler and clearer instructions, which will once again fulfill the expectations of significant relief for the middle class and salaried individuals. It is expected that the upcoming budget will also be a major opportunity for taxpayers.
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