Budget 2026 Reactions Live Updates: What Gen Z wants from FM Nirmala Sitharaman on taxes, take-home salary, return filings
Business Today Desk | Updated Feb 1, 2026 1:47 PM IST
A key proposal being pushed by taxpayers and financial experts is the introduction of joint income tax filing for married couples, a change seen as particularly beneficial for dual-income families facing mounting cost-of-living pressures in urban India.
As Sitharaman prepares to present the Union Budget in Parliament, there have been demands for deeper tax reforms. IUnion Budget 2026 is set to be a landmark moment for Finance Minister Nirmala Sitharaman. In an hour, FM Sitharaman will present the Union Budget for FY 2026–27, becoming the first woman finance minister to deliver the annual exercise for a ninth straight year.
As Sitharaman prepares to present the Union Budget in Parliament, there have been demands for deeper tax reforms. Income tax is once again at the centre of attention as expectations build ahead of the Union Budget 2026, particularly among salaried and middle-class taxpayers grappling with rising household expenses and uneven wage growth. While demands for relief are loud, many experts believe Finance Minister Nirmala Sitharaman is more likely to opt for calibrated tweaks rather than sweeping tax overhauls.
A key proposal being pushed by taxpayers and financial experts is the introduction of joint income tax filing for married couples, a change seen as particularly beneficial for dual-income families facing mounting cost-of-living pressures in urban India.
India’s current tax regime requires spouses to file returns individually, regardless of marital status. This approach often complicates tax planning and limits the ability of households to efficiently use deductions and exemptions, especially where incomes between partners are uneven. For tax purposes, married individuals are treated as completely separate entities.
Supporters of joint filing argue that India is out of step with several advanced economies, including the United States, where couples can opt for “Married Filing Jointly” and benefit from more favourable tax treatment. With middle-class finances under strain, proponents see Budget 2026 as a potential inflection point for aligning the tax system with modern household economics.
Several tax professionals expect targeted relief for salaried employees and retirees. Suggestions include raising the standard deduction from ₹75,000 to ₹1 lakh, easing retirement taxation by increasing the tax-free portion of NPS withdrawals, and enhancing the exemption limit for long-term capital gains. Such measures, experts argue, would provide meaningful relief without straining fiscal arithmetic.
There is also a strong push to modernise existing frameworks. Professionals have flagged that presumptive taxation under Section 44ADA no longer reflects today’s cost structures, with calls to reduce the deemed profit rate from 50% to 40%. At the same time, the lack of home loan benefits under the new tax regime remains a sore point, especially for first-time buyers, prompting demands for limited deductions to restore balance between the old and new regimes.
Housing-related relief features prominently on the wishlist. Experts want HRA rules revisited, arguing that more large cities should qualify as “metros” for higher exemptions. Senior citizens, too, are seeking differentiated treatment, including higher basic exemption limits and additional medical deductions under the new regime, given rising healthcare costs.
On the compliance side, the Institute of Chartered Accountants of India has proposed simplifying the TDS structure by cutting the number of rates to reduce disputes and ease administration. Market-linked demands include lower capital gains tax, rationalisation of securities transaction tax, and tax parity for debt instruments to boost investor sentiment.
Beyond income tax, suggestions range from real-time income tax refund tracking to measures supporting gold demand amid high prices. Overall, the consensus is clear: Budget 2026 is expected to focus on fine-tuning and stability rather than “big bang” tax announcements, balancing taxpayer expectations with fiscal discipline.
The rollout of the Income Tax Act, 2025
Sanjiv Bajaj, Joint Chairman & Managing Director, Bajaj Capital, said: "The rollout of the Income Tax Act, 2025, reduced TCS on overseas transactions, extended timelines for return revisions, and clearer treatment of cross-border investments collectively ease compliance, improve transparency and strengthen trust between taxpayers and the system. These measures reduce friction for individuals, NRIs and businesses, while reinforcing the formal financial ecosystem. Equally important is the focus on deepening capital markets. Initiatives to strengthen the corporate bond market, encourage large issuances and improve market-making mechanisms will help channel long-term capital into infrastructure, manufacturing and innovation. A stable and predictable tax and regulatory environment is essential for patient capital, and the Budget moves decisively in that direction."
Manish Mishra, Partner & Head - Indirect Tax, JSA Advocates & Solicitors, said: “Customs duties exemptions proposed to be removed on items of goods manufactured in India and having negligible imports. This will encourage import substitution and boost local manufacturing. “The time period for export of final products from 6 months to a year for leather and textiles will be a boon for the sector. Exemption on Lithium-ion batteries for BESS projects is expected to cater to a long-standing demand of the sector and reduce the tax burden on this critical sector. Reduction of customs duty on aircraft parts for the MRO is expected to give an impetus to the MRO sector. Goods imported for personal use are proposed to be taxed at 10 per cent instead of 20 percent leading to relief for many. Advance rulings of customs to be binding for 5 years instead of the earlier 3 years, leading to a greater certainty for businesses and reduced litigation. Simplification of procedures for import and export of goods is likely to result in speedier clearances and ease of operation for businesses. While measures have been announced to allow eligible SEZ manufacturers to sell to DTA at concessional duty rates, there is no mention of DESH bill for overhaul of the SEZ act to align it with GST and Customs laws.”
Corporate taxes rationalised
Kumarmanglam Vijay, Partner and Head Of Practice - Direct Tax, JSA Advocates & Solicitors
“With corporate tax as well as individual taxation already rationalised, it seems that the Government will focus on providing incentives to key manufacturing initiatives that align with its strategic autonomy and global alignment priorities. I see more support, whether by policy initiatives, tax incentives or subsidies coming to energy, defence technology, critical minerals, shipping and import substitution in critical areas.”
“Governments' focus on rejuvenating industrial clusters and supporting MsMEs will significantly augment the manufacturing sectors and provide impetus to employment. Growth to shift to non-metro cities and MSMEs, which will play a larger role in manufacturing and employment going forward.”
“Reduction of TCS on education and medical purposes, as well as overseas tours to 2% is welcome. Significant steps proposed to make compliance easier for taxpayers with a focus on ease of compliance, reducing litigation, decriminalising offences and introducing monetary penalties and fees instead of penalties. These will certainly help taxpayers get peace of mind and enhance ease if doing business.
“Tax holiday is provided to foreign companies providing cloud services until 2047. This would give impetus to data centre business in India.”
“Arms-length margin of 15.5 % on iTES services under safe harbour to be provided by companies and GCCs operating in India would greatly enhance certainty and overcome major transfer pricing litigation.”
“Direct tax measures presented by the finance minister in the Budget are on expected lines with no changes in tax rates except a marginal increase in STT. The focus is on ease of compliance and reducing the points of friction with the taxpayers. Move towards decriminalising the compliance and imposing fines is welcome. A big change is to provide 15.5% margin for IT and ITES exports upto 3000 crores under safe harbour provisions is likely to give a major boost to the Entrepreneurs wanting to set up IT services and GCCs. With this Government has made it clear that it would like India to retain its competitiveness in the world. Another anomaly sought to be amended is to retain the capital gains treatment to gains in buy back of shares.”
Markets on edge
Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities
"The Union Budget FY27 kept markets on edge as the fiscal deficit target was pegged at 4.3%, while STT on futures was raised to 0.05% and on options to 0.15%, a move that is likely to dent participation in F&O. There was no update on import duty for bullion, and with sharp weakness already seen in CME on Friday, domestic gold and silver reacted negatively. Gold has corrected nearly 20% from its peak of ₹1,82,500 to around ₹1,47,800, while silver has seen a much sharper 36% decline from ₹4,20,000 to near ₹2,65,650. Going ahead, gold is expected to remain volatile but relatively more stable compared to silver, which may continue to witness exaggerated swings. In the current phase, caution is advisable — a watch-and-learn approach is better until volatility subsides and price structures stabilize."
Custom reforms
The Budget delivers a significant overhaul of the customs framework, streamlining procedures and rationalising provisions across the trade ecosystem. Reforms covering SEZ’s, AEO and related compliance mechanisms reflect a clear shift towards trade facilitation, risk-based controls and ease of doing business. By aligning customs processes with global best practices, the overhaul is expected to reduce transaction costs, improve cargo movement efficiency and enhance India’s competitiveness in international trade.
Sanjay Chhabria, Senior Director, Indirect Tax, Nexdigm
Fiscal Consolidation
Varun Gupta, CEO, Groww Mutual Fund on Fiscal Consolidation and Defence .
The continued glide path on fiscal consolidation, with the deficit projected at 4.3% of GDP, reflects a clear commitment to balancing growth with long-term macro stability. Maintaining fiscal discipline while increasing devolution to states and sustaining capital expenditure is critical for keeping government debt on a declining trajectory. For investors, this predictability in fiscal policy helps anchor inflation expectations, interest rates and overall market confidence .”
India’s growth trajectory
Sanjiv Bajaj, Joint Chairman & Managing Director, BajajCapital
Budget 2026 reflects confidence in India’s growth trajectory while remaining firmly anchored in fiscal discipline. At a time of global volatility, the government’s calibrated approach combining a strong capital expenditure push with a credible fiscal consolidation path offers reassurance to markets, financial institutions and long-term investors. The Budget makes a meaningful contribution by simplifying and modernising the tax and compliance framework. The rollout of the Income Tax Act, 2025, reduced TCS on overseas transactions, extended timelines for return revisions, and clearer treatment of cross-border investments collectively ease compliance, improve transparency and strengthen trust between taxpayers and the system. These measures reduce friction for individuals, NRIs and businesses, while reinforcing the formal financial ecosystem. Equally important is the focus on deepening capital markets. Initiatives to strengthen the corporate bond market, encourage large issuances and improve market-making mechanisms will help channel long-term capital into infrastructure, manufacturing and innovation. A stable and predictable tax and regulatory environment is essential for patient capital, and the Budget moves decisively in that direction. The continued emphasis on MSME liquidity, credit guarantees and risk-sharing frameworks recognises the sector’s central role in employment generation and economic resilience. For financial institutions, this creates opportunities to expand responsible credit, risk protection and advisory services within a more structured and transparent environment. Overall, Budget 2026 looks beyond short-term economic cycles and focuses on building durable institutions, robust financial markets and a simplified tax architecture. It reinforces the belief that India’s next phase of growth will be driven not just by scale and speed, but by stability, compliance clarity and long-term value creation.”
Venkatesh Naidu , CEO, BajajCapital Insurance Broking Ltd
Budget 2026 may appear understated, but that in itself reflects a phase of policy maturity. Many structural reforms particularly on taxation and GST have already been implemented over the past year, which has brought a degree of stability and predictability to the insurance ecosystem. In that sense, the absence of disruptive changes allows the industry to focus on execution and deeper penetration. There were expectations around enhanced tax relief under Section 80D, especially for non-senior and senior citizens, given the sustained rise in healthcare costs. While those proposals did not materialise, the broader thrust of the Budget towards healthcare infrastructure, critical drug manufacturing and reduced import costs is significant. These measures have the potential to improve treatment accessibility and affordability over time, which is a positive development for both policyholders and insurers. A stronger healthcare system ultimately reduces the severity and frequency of claims, helping insurers manage risk more efficiently. Over the medium term, this could support more sustainable pricing and better product design, provided cost efficiencies are passed on to consumers. The continued focus on financial inclusion, MSME resilience and infrastructure-led growth also indirectly benefits the insurance sector by expanding the base of insurable assets, enterprises and livelihoods. As economic activity broadens, the role of insurance as a risk mitigator becomes even more critical. Overall, Budget 2026 reinforces stability rather than surprise. For the insurance industry, this creates an opportunity to build trust, innovate responsibly and strengthen long-term protection for individuals and businesses in a growing economy.
Rajarshi Dasgupta, Executive Director - Tax, AQUILAW, said: “In a major boost to the digital economy, the Finance Minister Nirmala Sitharaman proposed a tax holiday until 2047 for any foreign company providing global cloud services using data centre infrastructure located in India. This move is expected to attract large-scale data centre investments and strengthen India’s role in global digital services.”
Boost to real estate
Pyush Lohia, Director, Lohia Worldspace
The Union Budget 2026 is news for the real estate and infrastructure sectors. It tells us that things will be okay. The government will spend money, ₹12.2 lakh crore on public projects. This should help get things done faster and make it easier to get around and finish projects on time. When infrastructure is good, people want to buy houses. So the government spending money on infrastructure is a thing for people who want to buy homes. The Union Budget 2026 and its plans for infrastructure will help people feel confident about buying homes. The government has decided to create companies called REITs for the land owned by Central Public Sector Enterprises. This is an idea because it will help use land that is not being used properly and it will also make the commercial real estate market stronger. The new Infrastructure Risk Guarantee Fund is also a thing. It will help projects that take a long time to complete and need money for a long time.
The government plans to invest money in City Economic Regions. This will help cities that are not as big as the major cities to grow in a more organised way. These smaller cities are becoming places, for business and people are starting to want to live and work there. The government is calling these cities Tier-3 cities. Overall, the Budget provides stability, improves investor sentiment and lays the groundwork for balanced, sustainable growth across residential, commercial and infrastructure real estate segments.
Budget 2026 signals infrastructure thrust as FY27 capex set at Rs 12.2 lakh crore
FM Nirmala Sitharaman announced a significant increase in capital expenditure for FY27, raising the allocation to ₹12.2 lakh crore to sustain the government’s infrastructure-led growth push. Presenting the Budget, she said public capex has risen sharply over the past decade—from about ₹2 lakh crore in 2014–15 to ₹11.2 lakh crore in the Budget Estimates for FY26—and the proposed hike for FY27 is aimed at maintaining this momentum.
Divam Sharma, Co Founder and Fund Manager at Green Portfolio PMS, said: "The government has announced a capital expenditure (capex) target of ₹12.2 lakh crore for the upcoming fiscal, marking a substantial increase from ₹10 lakh crore in FY26. This represents robust double-digit growth, signaling a strong policy focus on infrastructure development as a key driver of economic expansion. Higher capex allocation typically translates into increased spending on roads, railways, airports, energy, and urban development projects, which not only stimulates demand in construction and ancillary sectors but also creates a multiplier effect across the economy. In long term, such aggressive capex can have several long-term implications. Infrastructure and heavy engineering companies are likely to see improved order books and revenue growth. Sectors like steel, cement, power, and transportation could benefit from sustained demand. While short-term market reactions may be influenced by macro factors and liquidity conditions, consistent capex-led growth can support higher long-term equity valuations, especially for cyclical and capital goods stocks. Over time, this approach may foster investor confidence in growth-oriented sectors, creating a positive structural impact on the equity market."
Budget 2026: Gen Z wants tax relief that boosts take-home pay, not complex deductions
As expectations build ahead of Budget 2026, Gen Z taxpayers—first-jobbers and early-career professionals—are hoping Finance Minister Nirmala Sitharaman delivers measures that meaningfully lift take-home pay rather than just offering complex deductions. According to Ramachandran Krishnamoorthy, Director – Payroll Services at Nexdigm, recent reforms have already moved in that direction, but there is room to go further.
Check LIVE coverage here: Budget 2026 LIVE Updates: Rare earth corridors to be established, ₹10,000 cr for biopharma sector -- Nirmala Sitharaman
One of the biggest gains for young earners has been the sharp rise in the tax-free income threshold under the new tax regime. With the Section 87A rebate and standard deduction, salaried individuals earning up to around ₹12 lakh effectively pay no income tax. For Gen Z, this translates into higher disposable income right from their first job.
The increase in the standard deduction to ₹75,000 has also directly boosted monthly take-home pay by reducing taxable income without requiring additional investments or paperwork. Looking ahead, experts expect Budget 2026 to focus on refining tax slabs—possibly widening lower-rate bands or easing rates in middle slabs where many young professionals fall.
Further simplification of TDS thresholds could also help by preventing excess tax deductions during the year, reducing the need to wait for refunds. Finally, easier compliance and filing processes would lower stress and errors, ensuring tax administration does not quietly erode disposable income. For Gen Z, simplicity may matter as much as savings.
How much tax are you paying now
Full report read here: Union Budget 2026: What are your tax slabs and how much goes to the Income Tax Department
₹12 lakh income Taxable income: ₹11.25 lakh Tax slab: ₹8–12 lakh Final tax payable: ₹0
₹15 lakh income Taxable income: ₹14.25 lakh Tax slab: ₹12–16 lakh Final tax payable: ₹97,500
₹20 lakh income Taxable income: ₹19.25 lakh Tax slab: ₹16–20 lakh Final tax payable: ₹1,92,400
₹25 lakh income Taxable income: ₹24.25 lakh Tax slab: ≥ ₹24 lakh Final tax payable: ₹3,19,800
₹30 lakh income Taxable income: ₹29.25 lakh Tax slab: ≥ ₹24 lakh Final tax payable: ₹4,75,800
Income tax slabs explained: What Budget 2025 changed and how it affects you
Budget 2025 reshaped India’s income tax landscape by significantly widening slabs under the new tax regime and raising the basic exemption limit to ₹4 lakh. The move was aimed at simplifying taxation and offering broader relief to salaried taxpayers by reducing dependence on exemptions and deductions.
Under the old tax regime, the basic exemption limit continues to differ by age. For individuals below 60 years, income up to ₹2.5 lakh remains tax-free. Resident senior citizens (60–79 years) enjoy a higher exemption of ₹3 lakh, while super senior citizens aged 80 years and above get the highest relief, with income up to ₹5 lakh exempt from tax.
New tax regime slabs (FY 2025–26)
Under the revised new regime, income is taxed progressively as follows:
Income up to ₹4 lakh: Nil
₹4 lakh to ₹8 lakh: 5%
₹8 lakh to ₹12 lakh: 10%
₹12 lakh to ₹16 lakh: 15%
₹16 lakh to ₹20 lakh: 20%
₹20 lakh to ₹24 lakh: 25%
Above ₹24 lakh: 30%
Old tax regime slabs
The old regime retains fewer slabs but higher jump points:
Up to ₹2.5 lakh: Nil
₹2.5 lakh to ₹5 lakh: 5%
₹5 lakh to ₹10 lakh: 20%
Above ₹10 lakh: 30%
What changed in 2025
A key attraction of the new tax regime is the higher standard deduction of ₹75,000, compared with ₹50,000 under the old regime. In addition, the deduction on family pension income has been increased to ₹25,000, offering relief to pensioners.
From FY 2025–26, individuals with taxable salary income of up to ₹12.75 lakh can effectively pay zero tax under the new regime after factoring in deductions and rebates. Even higher earners stand to gain: those earning up to ₹25 lakh are expected to save over ₹1 lakh by opting for the new regime, while reduced surcharge rates make it more attractive for incomes above ₹50 lakh as well.
Taxpayers are advised to use an income tax calculator to compare both regimes and assess which option delivers the maximum savings based on their income and deduction profile.