Union Budget Ahead: Salaried Class and Middle-Income Groups Pin Hopes on Major Tax Relief

New Delhi: With only days remaining for the presentation of the Union Budget of the third Narendra Modi government, expectations are running high among salaried taxpayers and the middle class, particularly on the front of income tax relief.

The Union Budget, scheduled to be presented by Finance Minister Nirmala Sitharaman on February 1, is widely expected to prioritise measures aimed at easing the tax burden on individual taxpayers. In the previous budget, the government had exempted income up to ₹12 lakh from tax under the New Tax Regime. This year, however, economists and policy watchers suggest that the tax-free income threshold could be raised significantly, possibly up to ₹17 lakh.

At present, more than 90 per cent of taxpayers have opted for the New Tax Regime, largely due to its simplified structure and reduced compliance burden. To further enhance its appeal, the government is reportedly considering up to five key changes in the upcoming budget.

One of the major proposals under discussion is an increase in the exemption limit for Long-Term Capital Gains (LTCG) from the current ₹1 lakh to ₹1.30 lakh. Such a move would provide substantial relief to small and retail investors in the equity markets.

Another significant expectation relates to the standard deduction available to salaried individuals. Currently capped at ₹75,000, the deduction may be raised to ₹1 lakh or more, offering meaningful relief amid rising living costs.

There is also growing demand to incorporate key exemptions—such as House Rent Allowance (HRA) and health insurance premium deductions—into the New Tax Regime, where these benefits are presently unavailable. Given the sharp increase in medical expenses, allowing deductions for health insurance and medical claims is seen as a critical step to protect household finances.

Additionally, taxpayers are seeking the inclusion of interest deductions on home loans and education loans under the New Tax Regime. Special concessions for senior citizens are also expected to feature in the budget proposals.

If the government accommodates these demands, the combined impact of enhanced standard deduction, housing loan benefits, and insurance-related exemptions could push the effective tax-free income limit to as high as ₹17 lakh, providing significant relief to the salaried and middle-income segments of the population.