There is always hope for more. Taxpayers share the same expectation when it comes to income tax announcements in the Union Budget every year — more tax relief. After the major restructuring of income tax slabs last year and the GST reforms announced in 2025, is there still room for further relief?
According to JM Financial, the answer is yes. From an increase in the standard deduction to a hike in the tax-free exemption limit for equity LTCG, a report by JM Financial highlights key tax-related expectations from the Budget for salaried taxpayers, the middle class and the corporate sector.
Here are top 5 wishlist of JMfinancial
#1. higher standard deduction, home loan interest relief
One of the key expectations is an increase in the standard deduction, the nontaxable income of salary, to Rs 1,00,000 from Rs 75,000 to offset rising living costs. It also calls Budget 2026 to allow Section 24(b) deduction for interest on home loans under the New Tax Regime just like the old tax regime.
#2. Ease tax burden for Rs 12–20 lakh income earners
JM Financial also seeks rationalisation of income tax slabs, particularly for the Rs 12 lakh to Rs 20 lakh income range to reduce the tax burden. Currently, individuals earning Rs 12 lakh – Rs 16 lakh are supposed to pay 15% tax and individuals earning Rs 16 lakh – Rs 20 lakh are paying 20% under the new tax regime. Individuals earning up to about Rs 12 lakh may pay no tax after applying the standard deduction and rebate under Section 87A, depending on income profile. A smoother slab structure could reduce the burden on upper-middle-income earners.
#3. higher Section 80D deduction for health insurance
JM Financial also recommended to increase the Section 80D deduction limit to Rs 50,000 to account for medical inflation. Currently under Section 80D of the Income Tax Act, taxpayers are allowed to claim a deduction up to Rs 25,000 on health insurance premiums and certain medical expenses for the people below the age of 60 years.
#4. LTCG relief and simpler rules for capital markets
For capital markets, JM Financial expects the government to ease long-term capital gains taxation. It has suggested raising the tax-free exemption limit for equity LTCG to Rs 2 lakh from Rs 1.25 lakh.
The brokerage has also recommended standardising the definition of long-term holding to 12 months across all asset classes, including equity, debt, gold and real estate, to reduce complexity. In addition, it has proposed allowing capital losses to be set off against other heads of income.
#5. Push for buyback tax reform, GCC norms and PLI expansion
On the corporate front, JM Financial has called for changes to the buyback tax rules. It wants only the actual capital gains to be taxed, instead of treating the entire buyback amount as dividend income.
It has also highlighted the need for a clear tax and transfer pricing framework for Global Capability Centers, which remain critical for India’s IT services sector. The brokerage expects the government to expand Production Linked Incentive (PLI) schemes to labour-intensive sectors such as textiles and leather.
JM Financial has further stressed the need for a clear divestment roadmap, particularly for public sector banks and IDBI Bank.