Income Tax Budget 2026 Expectations Live: Middle-Class Eyes Further Tax Relief, Investors Seek LTCG Exemption

Market sentiment, in particular, hinges on several factors, including the tax structure. According to Anand Rathi Group Founder Anand Rathi, reducing transactional taxes such as the Securities Transaction Tax (STT) and lowering personal income tax rates would help trigger a market rally. He flagged a key friction point in the current tax regime - the overlap of STT with the reintroduced capital gains tax.

Rathi argued that to boost investor confidence, the government should rationalise capital gains tax and reduce personal income tax in the upcoming budget. He also pointed out that STT was originally introduced as a substitute for capital gains tax. However, even after capital gains tax was reinstated - at a higher rate - STT continues to remain in place. READ FULL STORY HERE

Market stakeholders also demanded enhancement of the tax-free exemption limit on long-term capital gains (LTCG) from equity investments to provide greater relief to retail and long-term investors. In its budget wishlist, JM Financial Services recommended that the government should raise the tax-free exemption limit for equity LTCG from Rs 1.25 lakh to Rs 2 lakh.

The firm also sought to standardise the definition of 'long term' to 12 months across all asset classes, including equity, debt, gold and real estate, to reduce complexity and improve tax clarity. Additionally, it called for allowing capital losses to be set off against income under other heads. Market participants have also cautioned against any further increase in transaction-related taxes. READ FULL STORY HERE

According to Rajeev Gupta, Executive Vice President & Business Head - Third Party Products, Religare Broking Ltd over the decades, India transform from a nation of savers to a powerhouse of investors. ''While the 2025 Budget was a landmark victory for the middle class, effectively making income up to Rs 12.75 lakh tax-free, the Union Budget 2026 must now address the "Aspiration Drain."

Our highest earners (Rs 2 Cr ) currently face a peak tax rate of nearly 39% to 43%. This isn't just a tax; it's an exit trigger. We are seeing a quiet migration of our best entrepreneurs to hubs like Dubai, where personal income tax is Nil. To keep Indian capital at home, we must rationalize surcharges and cap the effective tax rate at a competitive 30%,'' he said.

Income Tax Budget 2026 Expectations Live: The Income Tax slabs under the new tax regime were overhauled, in a bid to provide massive relief to the middle class. A taxpayer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax for assessment year 2025-26, which is 100% of tax payable as per existing rates, FM Sitharaman had said.