The Union Budget 2026 will be tabled today, and expectations are running high. This will be the first full Budget after Nirmala Sitharaman delivered one of the biggest personal tax reliefs in recent years — making income up to ₹12 lakh effectively tax-free through revised slabs and rebates.
That landmark move put more money in the hands of the middle class and eased pressure on household budgets. Now, taxpayers are hoping the government will use Budget 2026 to fix the finer gaps in the tax framework — issues that still pinch families, senior citizens, and small investors despite last year’s big relief.
According to CA Dr. Suresh Surana, the Union Budget continues to be a powerful tool that shapes disposable income and personal financial decisions, especially as more individuals come under the formal tax net. He believes Budget 2026 is an opportunity to move from broad relief to targeted, structural improvements that make the tax system more practical and fair.
Why joint taxation for married couples is back in focus
India currently follows a strict individual-based taxation system, even though household finances are often managed jointly. This, CA Dr. Suresh Surana says, creates an imbalance in single-income or uneven-income families.
“In many households, income may be earned by one spouse, but expenses and savings decisions are shared,” he explains. An optional joint taxation framework, while keeping separate filing as the default, could help married couples manage tax liability more efficiently and better reflect economic reality.
Several countries already recognise the household as an economic unit. A similar optional system in India could offer flexibility without forcing a one-size-fits-all approach.
Senior citizens: Relief given, but not fully
Last year’s policy changes raised the threshold for non-deduction of TDS on interest income for senior citizens to ₹1 lakh. However, the deduction under Section 80TTB remains capped at ₹50,000.
“This mismatch leads to unnecessary tax incidence and compliance burden for senior citizens,” says CA Dr. Surana. He suggests that the deduction limit should be aligned with the TDS threshold and raised to ₹1 lakh to provide real relief to retirees who rely heavily on interest income.
Medical costs rising, deductions lagging
Healthcare expenses have risen sharply, but tax deductions have not kept pace. Under current rules, only senior citizens without health insurance can claim up to ₹50,000 for actual medical expenditure under Section 80D.
CA Dr. Surana believes the scope needs expansion. “Medical expenses are not limited to senior citizens anymore. The benefit should be extended to other individuals as well,” he says. He also recommends raising the deduction limit to ₹1 lakh and allowing Section 80D benefits under the new tax regime, which would make it more attractive for taxpayers post the ₹12 lakh tax-free relief.
Gift tax limits stuck in 2006
The exemption limit for gifts received from non-relatives under Section 56(2)(x) is still ₹50,000 — a figure last revised nearly two decades ago.
“Considering inflation and higher living costs, this limit has clearly become outdated,” CA Dr. Surana notes. He suggests increasing the threshold to ₹1.5 lakh to avoid taxing genuine, small-value gifts and reduce disputes.
Family settlements need clear tax treatment
Family settlements often involve transfer of assets among relatives, and courts have repeatedly ruled that such transactions should not attract capital gains tax. Yet, the law does not explicitly say so.
To reduce litigation and bring certainty, CA Dr. Surana recommends that family settlements be clearly included under Section 47, ensuring they are not treated as taxable transfers for capital gains purposes.
More time for belated returns, more compliance
Currently, taxpayers can file a belated return only up to December 31 of the assessment year. Extending this deadline to March 31, the end of the assessment year, could ease compliance pressure.
“When taxpayers get adequate time to gather documents and file returns, voluntary compliance improves,” CA Dr. Surana explains, adding that flexibility works better than purely punitive measures.
Capital gains and rebate gap after ₹12 lakh relief
While the effective no-tax threshold has been raised to ₹12 lakh, the Section 87A rebate still does not apply to income taxed at special rates, such as equity capital gains under Sections 111A and 112A.
“This creates an unintended disparity,” says CA Dr. Surana. Small and retail investors, whose income increasingly comes from equity markets, often end up paying tax despite staying within the overall ‘no-tax’ income zone. Extending the rebate to cover such capital gains, at least up to the threshold, could make last year’s relief more meaningful.
What taxpayers are watching in Budget 2026
After delivering one of the biggest tax cuts in recent memory, Budget 2026 is expected to focus on fine-tuning rather than headline-grabbing slab changes. From joint taxation and higher deductions to capital gains clarity, taxpayers are looking for simplification, fairness, and fewer grey areas.
As CA Dr. Suresh Surana puts it, “The next step after large tax relief is fixing the gaps. A simpler, clearer system will benefit taxpayers and strengthen voluntary compliance.”