Union Budget 2026: New Tax Regime to Get Boost with Increased Deductions

• The government may increase the standard deduction and introduce new deductions in the Union Budget 2026 to enhance the attractiveness of the new income tax regime.
• Initially, the new tax regime, introduced in Union Budget 2020, saw low adoption, but interest has grown due to continuous government efforts to simplify it.
• Experts recommend allowing deductions for HRA, health insurance, education loans, and home loans within the new regime to make it more appealing without compromising simplicity.
• Increasing the standard deduction from the current level to Rs 1 lakh or Rs 1.25 lakh is suggested to provide significant relief to salaried taxpayers amidst rising inflation.
• The old tax regime remains popular, especially among senior citizens, due to significant deductions available for healthcare, insurance, and interest income.

Why It Matters: Union Budget 2026 is expected to make the new tax regime more attractive by increasing deductions and simplifying benefits.