Budget 2026: ‘night of doom’ for the tax system; What will this budget be like, why are taxpayers trembling?

Union Budget 2026: The upcoming Union Budget to be presented on 1 February 2026 is going to prove to be a turning point in the history of the Indian tax system. Experts call it ‘make or break’ (Make or Break) Budget is considered because it is not just an account of income and expenditure but it is going to decide the future direction of the tax system.

1. Future of double tax structure

India is currently standing between two parallel tax regimes (Old vs New Tax Regime). The government has announced the ‘New Tax Regime’ has been made the default, but the old system is still in existence. In the budget of 2026, it is expected that the government can take a big decision to completely abolish the old system or merge it with the new one. If the old system ends, what will happen to exemptions on investments like 80C? This question is a matter of biggest concern for crores of middle class families.

2. Saving people’s purchasing power

Due to rising inflation globally and increasing prices of goods in the domestic market, the pressure on the pockets of the common man has increased. There is a strong demand to increase the standard deduction from ₹50,000 to ₹1,00,000 in Budget 2026. This is critical for the tax system because it has become necessary to leave more money in the hands of people to increase consumption. The higher rate slab of 18-20% needs to be rationalized so that tax compliance increases.

3. ‘Capital Gains Tax’ simplification of

Currently, India’s capital gains tax structure is quite complex. Holding periods and tax rates are different for different assets (shares, real estate, gold). Investors are demanding that it be called ‘One Nation, One Capital Gains Tax’ Should be simplified on the lines of. This is important for the tax system because it is essential to maintain investor confidence amid increasing volatility in the stock market.

4. Corporate Tax vs Personal Income Tax

In the last few years, huge cuts have been made in corporate tax, so that India can become a global manufacturing hub. However, now the pressure is from the individual income tax payers. The biggest challenge for the Finance Minister will be to strike this balance in Budget 2026 that how to provide relief in personal tax while keeping the revenue deficit low.

5. AI and data-based assessment

Budget 2026 to focus on ‘Artificial Intelligence’ in tax administration; Can present a big roadmap on the use of (AI). Government ‘Faceless Assessment’ Preparing to take it to the next level. This will reduce tax evasion, but making the system transparent and error-free is a big technical challenge.

Also read: Budget 2026: Will gold become cheaper after the budget or will silver prices skyrocket? What is special in the Finance Minister’s box?

Relief to the common man or will the burden increase?

budget 2026 This is of utmost importance for the tax system because it will decide how quickly India moves from a complex tax structure to a modern, simple and transparent system. The economic pace of 2026-27 will depend on whether this budget will provide relief to the common man or take strict steps to raise revenue.