It’s Tuesday, January 27, 2026, and if you’re a taxpayer, the countdown is officially on. We are exactly five days away from Nirmala Sitharaman presenting her ninth consecutive Union Budget on February 1.
The thing is, this isn’t just another budget. It’s the “launchpad” for the New Income Tax Act, 2025, which is scheduled to kick in on April 1. Or nothing.
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Budget 2026: The Taxpayer’s Field Notes
It’s an ongoing situation where the government is trying to kill off the old, complicated tax regime by making the new one irresistible. Here’s the ground reality of what’s being discussed:
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The ₹1 Lakh Carrot: Right now, the standard deduction for the new tax regime is ₹75,000. But the word on the street—and from big firms like KPMG—is that it could jump to ₹1,00,000. The rationale? Urban inflation is biting, and the government wants to offset the “bracket creep” caused by the 8th Pay Commission raises hitting bank accounts this month. Those too.
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The “Zero Tax” Goal: Last year, they made income up to ₹12 lakh effectively tax-free (with rebates). For 2026, experts are eyeing a move to push that “zero tax” threshold to ₹14 lakh by widening the 5% and 10% slabs. Let’s be real—if you’re earning ₹13 lakh and still paying zero tax, the old regime becomes a dinosaur overnight.
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The TDS Cleanup: Here’s the kicker—TDS is a mess. There are currently over 30 different sections. The New Act 2025 aims to consolidate these into just two or three standardized rates (maybe 1% and 5%). It’s about making life easier for small businesses and landlords who are tired of the paperwork. Or nothing.
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87A Rebate Disparity: There’s a lot of noise about small taxpayers who have capital gains. Currently, if you earn under ₹12 lakh but have a few thousand in mutual fund gains, you lose the ₹60,000 rebate. Expect a “fix” for this so that small investors aren’t punished for having a SIP.
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Budget 2026: The “Likely vs. Unlikely” Table
| Feature | Current Status (FY 2025-26) | Prediction for Feb 1 (FY 2026-27) |
| Standard Deduction | ₹75,000 (New Regime) | ₹1,00,000 or ₹1,25,000 |
| 8th Pay Commission | Effective Jan 1, 2026 | Slabs may widen to prevent higher tax hits. |
| Section 80D (Health) | Only in Old Regime | Could be added to New Regime to help seniors. |
| Home Loan Interest | No benefit in New Regime | Possible ₹2 lakh deduction allowed in New Regime. |
| TDS on Rent | Threshold at ₹6 lakh | Rationalized rates (fewer slabs). |
And Here’s the Kicker…
The New Income Tax Act, 2025 is going to replace the 1961 law entirely. It’s cutting down the sections from 819 to just 536. The thing is, the “Assessment Year” is being killed off and replaced with a unified “Tax Year.” It’s an ongoing situation where the goal is a “SIMPLE” framework (Streamlined, Integrated, Minimized litigation). Those too.
One side comment—don’t expect a major cut in the 30% tax rate. The government has a fiscal deficit to manage, especially after the GST rate cuts in late 2025. Or nothing.
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End…
