New Delhi: With the Union Budget 2026 set to be presented in Parliament in the coming days, discussions around the future of India’s income tax structure have gained momentum. Among the key questions being debated is whether the government will completely phase out the old income tax regime or introduce changes to make it more attractive for taxpayers.

Expectations from the upcoming budget are high, particularly among salaried individuals and the middle class. In the previous budget, the Centre announced significant tax relief under the new tax regime, including an increase in the standard deduction to Rs 75,000 and an enhancement of the Section 87A rebate from Rs 25,000 to Rs 60,000. As a result, individuals earning up to Rs 12 lakh annually were exempted from paying income tax. However, taxpayers following the old tax regime did not receive any additional benefits, leading to disappointment among a large section of earners.

Despite the introduction of a simplified new tax regime, the government retained the old system, keeping existing tax slabs, deductions, and exemptions unchanged. Benefits under popular provisions such as Sections 80C and 80D, home loan interest under Section 24B, and National Pension System (NPS) contributions have remained the same for several years.

This has reignited speculation ahead of Budget 2026 on whether the Centre will finally discontinue the old tax regime or announce selective changes to address long-standing demands. Some experts suggest the government may consider limited exemptions within the new tax regime, particularly to encourage long-term investments in insurance, retirement planning, and real estate.

There are also expectations of announcements aimed at improving income tax administration, including faster refund processing and reforms related to delayed ITR filings, AIS mismatches, TDS complications, and recurring income tax notices. Freelancers, pensioners, and salaried taxpayers have consistently raised concerns over these issues.

In addition, senior citizens have expressed dissatisfaction over the absence of specific benefits under the new tax regime. Demands for higher rebates, special tax slabs, and increased exemptions for medical expenses continue to grow.

However, tax experts believe that major tax cuts are unlikely in Budget 2026. Instead, the government is expected to focus on simplifying the new tax regime further while providing greater clarity on the future of the old income tax system.