Home loan benefits, FD tax cut: Taxpayers eye big relief in Union Budget 2026-27

With the Union Budget just a couple of days away, public anticipation is steadily mounting. Taxpayers across the country are keenly watching what Finance MinisterNirmala Sitharaman will announce in the 2026-27 Budget, hoping for significant relief measures.

Salaried employees and the middle class, in particular, are expecting changes in income tax provisions. There is strong speculation that the standard deduction, currently Rs 75,000, may be increased to Rs 1 lakh or more. Additionally, there is a demand for raising the income tax exemption limit from the existing Rs 12 lakh to Rs 15 lakh to offset rising inflation.

Taxpayers are also seeking revisions in tax slabs. At present, income above Rs 24 lakh is taxed at 30%, with demands to increase this threshold to Rs 30 lakh. Another key expectation is the expansion of the Section 87A rebate, which is currently applicable only to normal income and excludes gains from equity shares and mutual funds-leaving small investors without relief.

"I have a hundred per cent belief that the Rs 75,000 threshold will be increased to Rs 1 lakh. The government has introduced a system where if the employer contributes for pension fund, there will not be any tax. They will introduce some more steps like this," said economic expert AK Sabat.

"I think the tax exemption limit should be increased from Rs 12 lakh to Rs 18 lakh. Medical and insurance should be more affordable," said taxpayer Sanjay Kumar Jain.

Home loan benefits remain a major focus. While interest on home loans is deductible under the old tax regime, the new tax regime does not offer this benefit. There is growing demand to include home loan interest deductions under the new regime, along with special incentives for first-time homebuyers.

Senior citizens are also hoping for tax relief, particularly on fixed deposit interest income. Meanwhile, investors are calling for an increase in the Section 80C investment limit, which has remained unchanged at Rs 1.5 lakh since 2014, to at least Rs 2.5 lakh.

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"My expectation is that individuals with a monthly income of Rs 2.5 lakh will have an average tax burden of around 12 per cent," said economic expert AK Sabat.

"There was a provision of Rs 1.5 lakh, including insurance and housing loan benefits, which is no longer in existence. The government should consider restoring this provision in the upcoming budget. Due to a decline in household savings, bank liquidity has been adversely affected, creating a void in the economy, and it should be restored," said Debajyoti Samal, a taxpayer.

Other expectations from the budget include tax relaxations for NRIs, additional concessions for defence personnel, and the announcement of a fixed deadline for filing Income Tax Returns (ITR).

As the nation waits for Finance Minister Sitharaman to open the Budget box, it remains to be seen how much relief the government will offer and which of these expectations will translate into policy announcements.