Jigar M. Patel
International Tax Attorney
On a Sunday when income-tax payers were expecting some tangible ‘tax holiday’, ironically it turned out to be a total holiday for any meaningful ‘tax incentive’. No wonder what has been doing the rounds is that this Budget will be long remembered not for what it has given, but what the common taxpayer has been sadly deprived of.
Confluence of Amendments to the Old & New
217 pages of the Finance Bill 2026 deal with 128 Clauses of amendment to both the Old Income-tax Act 1961 and the New Income-tax Act 2025. With 23 amendments to the 1961 Act, 86 amendments to the 2025 Act and the balance dealing with rates under both the old and new acts, as also the provisions in regard to ‘Foreign Assets of Small Taxpayers Disclosure Scheme’, tax professionals will no doubt be compelled to burn the midnight oil to be able to logically comprehend the mix of the old and new changes in law.
Ease of Living or mere Ease of Compliance?
It is high time for budget analysts to give marks to a Budget, keeping in view the significant distinction between reliefs to taxpayers which can be described as truly in the nature of ‘ease of living’, as compared to mere ‘ease of compliance’, which deals with procedural relaxations.
Undoubtedly, Budget 2026 has dealt with a number of meaningful procedural relaxations in regard to TDS and TCS, including some welcome reductions in applicable rates. However, to classify these as tax reliefs as sought to be attempted in the Explanatory Memorandum under the head of ‘ease of living’ is nothing short of an optical illusion.
In terms of what could actually save a penny in the individual taxpayer’s pocket, the only eligible provision is in respect of exemption on interest on compensation awarded by Motor Accidents Claims Tribunal. Quite amusingly, this has given rise to the jocular remark that under Budget 2026, the taxpayer cannot reap any tax saving without getting his vehicle bumped into a motor accident.
Call for Ironing Out the Rebate Anomaly
The slogan of Zero Tax on individual incomes less than Rs. 12 lakhs of the last year’s Budget 2025 proved to be a myth with taxpayers being deprived of any rebate whatsoever on taxable capital gains. In the light of zero tax relief granted under Budget 2026 to the small taxpayer, it is high time that this anomaly is sorted out in the post Budget proposals by providing for eligible relief for tax rebate up to Rs. 60,000 in cases of total income within the threshold limit of less than Rs. 12 lakhs.
After 7 Years’ (2019 to 2025) Colourful Rainbow
Why Complete Black-Out of Tax Reliefs in 2026?
| FM’s Budget | Nature of Relief | Amount of Max Tax Saving |
| 2019 | Increase in 87A Tax Rebate from Rs. 2,500 to Rs. 12,500 | Rs. 10,000 |
| Rs. 10,000 Rise in Standard Deduction for Salaried | Rs. 3,000 | |
| Rs. 1,50,000 Addl. Interest Deduction for New House | Rs. 45,000 | |
| 2020 | Restructuring of Slabs under New Tax Regime (NTR) | Rs. 75,000 |
| 2021 | Rs. 36,000 Exemption for LTC Cash Scheme | Rs. 10,800 |
| 2022 | Maximum Surcharge on Dividend and Capital Gain capped at 15% | Based on amount of Income |
| Exemption on Reimbursement / Ex-Gratia Receipt towards Covid Relief | Based on amount of Receipt | |
| 2023 | Rs. 50,000 Rise in Basic Exemption Limit | Rs. 2,500 |
| Increase in 87A Tax Rebate from Rs. 12,500 to Rs. 25,000 | Rs. 12,500 | |
| Rs. 50,000 Standard Deduction for Salaried under NTR | Rs. 15,000 | |
| Rs. 15,000 Standard Deduction for Family Pension under NTR | Rs. 4,500 | |
| Rise in Exemption Limit of Leave Encashment from Rs. 3 lakhs to Rs. 25 lakhs | Based on amount of Receipt | |
| Reduction in Max Rate of SC from 37% to 25% under NTR | Based on amount of Income | |
| 2024 | Rs. 25,000 Rise in Standard Deduction for Salaried | Rs. 7,500 |
| Rs. 10,000 Rise in Standard Deduction for Family Pension | Rs. 3,000 | |
| Increase in Deduction for Employer’s NPS contribution from 10% to 14% | Based on amount of Income | |
| Decrease in LTCG Tax Rate from 20% to 12.5% | Based on amount of capital gains | |
| 2025 | Restructuring of Slabs under NTR | Rs. 1,10,000 |
| Rs. 1,00,000 Rise in Basic Exemption Limit | Rs. 5,000 | |
| Increase in 87A Tax Rebate from Rs. 25,000 to Rs. 60,000 | Rs. 35,000 |
