Union Finance Minister Nirmala S. Kumar presented the Union Budget 2026 in Parliament on February 1, 2026, detailing a series of proposals set to directly impact individual taxpayers across the country. The budget focused on promoting economic stability, fostering growth, and simplifying the tax structure, with several measures aimed at providing relief and encouraging savings. The Finance Minister highlighted the government's commitment to a progressive and fair taxation system.

The comprehensive budget announcement included key revisions to income tax slabs, adjustments to various deductions, and reforms related to capital gains, among other provisions. These changes are anticipated to influence the financial planning and tax liabilities of millions of Indian citizens in the upcoming fiscal year.

Here are ten key changes from Union Budget 2026 for individual taxpayers:

  • Default New Tax Regime: The new tax regime, introduced in previous budgets, has been established as the default option for individual taxpayers. While the old tax regime, with its existing deductions, remains available, taxpayers must explicitly opt for it.
  • Enhanced Standard Deduction: For salaried individuals and pensioners, the standard deduction has been increased from INR 50,000 to INR 75,000 under both the old and new tax regimes, providing additional tax relief.
  • Revised Tax Slabs for Default Regime: The income tax slabs under the default new tax regime have been further rationalized. Income up to INR 7.5 lakh annually is now effectively tax-exempt due to an enhanced rebate under Section 87A, provided no deductions are claimed.
  • Increased Section 80C Limit: The deduction limit under Section 80C for investments in specified instruments such as Public Provident Fund (PPF), Employee Provident Fund (EPF), life insurance premiums, and equity-linked savings schemes (ELSS) has been raised from INR 1.5 lakh to INR 2.0 lakh.
  • Boost to Section 80D Deductions: The maximum deduction limit for health insurance premiums under Section 80D has been increased to INR 30,000 for non-senior citizens and INR 75,000 for senior citizens, up from INR 25,000 and INR 50,000 respectively, encouraging greater health coverage.
  • Rationalization of Capital Gains on Debt Mutual Funds: Long-term capital gains from debt mutual funds, which previously enjoyed indexation benefits, will now be taxed at the individual's applicable income tax slab rates, aligning them with short-term capital gains on such instruments.
  • Tax Incentive for Electric Vehicle Loans: A new provision introduces a deduction for interest paid on loans taken for the purchase of electric vehicles, up to INR 50,000 annually, aiming to accelerate EV adoption and support environmental initiatives.
  • Relief on Housing Loan Interest: The deduction for interest paid on housing loans for self-occupied property under Section 24(b) remains at INR 2 lakh. However, specific concessions have been introduced for first-time homebuyers in affordable housing segments, subject to certain income criteria.
  • Simplified Tax Compliance for Small Taxpayers: The budget proposes a streamlined process for filing income tax returns for individuals with income solely from salary, interest, and house property, utilizing pre-filled forms with enhanced data integration.
  • New Social Security Savings Scheme: A new, government-backed voluntary social security savings scheme, "Bharat Jan Suraksha Yojana," has been introduced, offering tax benefits on contributions up to INR 50,000 annually under a new Section 80JJ.

These proposals will undergo parliamentary debate and are expected to be passed into law by late March 2026. The changes are slated to take effect from April 1, 2026, for the assessment year 2027-28, impacting the financial decisions of taxpayers nationwide. The government stated that the aim is to create a more equitable and robust tax framework to support India's long-term economic trajectory.