From tax relief to tax ease: Expectations from Budget 2026

We are just a few days away from the Union Budget 2026—an event that is likely to touch the lives of most people, in one way or another. Naturally, there is keen interest in what the Budget may have in store, especially on matters that affect personal finances and taxes.
 
Looking back, last year’s Union Budget placed strong emphasis on making the new tax regime more appealing to taxpayers. This was achieved through a series of relief measures, including widening of tax slabs, lower surcharge rates for very high incomes, a higher income threshold for the Section 87A rebate, and other supportive changes.
 
With so many tax relief measures already introduced last year, the scope for any significant relaxation in personal income taxes this time appears limited. As the fiscal deficit target is likely to be met, the government is expected to stay focused on maintaining financial discipline rather than introducing fresh, large-scale tax concessions.
 
To maintain financial discipline, the government may once again lean on its recurring and much-favoured approach—simplifying the tax regime and easing compliance. While significant progress has already been made in simplifying the tax system, including the revamp of the decades-old Income-tax Act, several areas still merit further attention—if not in this Budget, then in the near future.
 
In today’s digital-first world, where smartphones have become the primary device for most people, a dedicated mobile app for the Income-tax could make the law far more accessible. And since most payments are already handled through mobile banking apps, integrating a simple “tax payment” feature would make paying taxes quick, convenient, and hassle-free.
 
It is common for spouses to hold financial assets jointly or to operate from a shared pool of funds for investments and household expenses. While this arrangement may be convenient from a family perspective, it often complicates individual tax filings. Determining how much each spouse has contributed becomes necessary to correctly report income in their respective returns.
 
In some cases, this can even lead to disputes or litigation—such as when one spouse is required to report foreign assets without having any corresponding income from those assets reflected in the tax return. Providing an option for joint return filing by spouses —along with suitably enhanced basic exemption limits, standard deductions, or other deductions—could help address these issues by simplifying compliance and reducing the risk of unintended tax complications.
 
The tax administration has made notable progress in capturing income details such as salary, interest, and dividends, with much of this information now pre-filled in tax returns. That said, several schedules—especially those relating to capital gains—still require considerable manual input.
Offering fully pre-filled returns for salaried taxpayers with no business income would go a long way in easing the compliance burden. Further, given the increasing accuracy of available data, the existing exemption from return filing currently available to certain senior citizens could be extended to other eligible categories of taxpayers.
 
While these are only a few expectations around tax regime and compliance, it is encouraging to see how far the tax department has come in improving ease of understanding and compliance through digital advancements. Building on this progress, the government can further harness digital progress to make tax compliance simpler, more intuitive, and more convenient for taxpayers.

(Views are personal; the author is Partner Mainstay Tax Advisors LLP)