As the Union Budget 2026–27 approaches (scheduled for 1 February 2026), millions of indian taxpayers are looking to Finance minister Nirmala Sitharaman for meaningful tax relief. After the significant changes in Budget 2025 — such as making incomes up to ₹12 lakh effectively tax‑free under the new regime and revising tax slabs — expectations have shifted toward fine‑tuning and extending relief rather than big rate cuts.

📉 Why More Relief Is on the Wish‑List

Tax experts and taxpayers alike want to see improvements that help everyday finances and adjust the system to rising costs. Key expectations include:

· Higher basic exemption limits and rebates to reduce tax outgo further.

· Increased standard deduction — some analysts suggest raising it from ₹75,000 to ₹1 lakh or more to help salaried taxpayers cope with inflation and rising expenses.

· Easier deductions and incentives for retirement savings, health insurance, and housing loans to make the new tax regime more practical and attractive.

· Simplified tax compliance and digitisation to make filing returns easier, especially for individuals across income groups.

Rather than broad, headline‑grabbing tax rate cuts, the focus is expected to be on targeted relief and rationalisation of slabs, especially in the mid‑income brackets (₹8–₹20 lakh), to boost take‑home income and consumption.

🏠 Why Homebuyers Want Tax Relief in Budget 2026

The real estate sector and potential homebuyers are making specific demands ahead of the 2026 Budget because many feel that housing affordability has lagged behind broader economic growth. With rising property prices and construction costs, buyers want measures that can reduce the financial burden of purchasing homes.

📊 Key Tax‑Benefit Demands from Homebuyers

Here’s what homebuyers and real estate stakeholders are pushing for:

➤ Higher home Loan Interest Deduction Limits

Homebuyers want the government to raise the deduction on home loan interest (currently capped at ₹2 lakh) to ₹4 lakh or more. This would significantly lower annual tax bills and make loan repayments more manageable.

➤ Enhanced Principal Repayment Deductions

Apart from interest, there’s a call to increase deductions on principal repayments under Section 80C (and related sections), which would further reduce taxable income for buyers.

➤ GST Rationalisation on Housing Inputs

Construction costs have risen sharply due to higher prices of raw materials and logistics. Reducing or rationalising GST on key inputs like cement and steel can meaningfully lower overall project costs, which could translate into more affordable home prices.

➤ Support for Affordable Housing Segment

Developers are seeking a revision of the affordable housing definition and related tax benefits so that a broader range of projects and buyers can qualify for incentives — helping revive demand in this crucial segment.

🏡 Broader Impact: Why Tax Relief Matters for Housing

📈 Boosting Demand in the Real Estate Market

Real estate activity directly affects jobs, banking credit growth, and related sectors. When tax relief is targeted toward homebuyers, it boosts buyer confidence and market momentum, which has a ripple effect throughout the economy.

📉 Easing Financial Burden on Buyers

For many families, especially in urban areas, housing remains the largest financial commitment. Increasing deductions on home loans and related costs puts more disposable income in the hands of taxpayers, helps them manage EMIs, and can accelerate decisions to buy rather than rent.

🧠 Balancing Tax Relief With Fiscal Prudence

While taxpayers and homebuyers hope for relief, the government also needs to balance this with fiscal responsibilities. Experts expect that targeted incentives — rather than sweeping tax cuts — will be the approach. This allows the government to support households and markets without creating excessive revenue shortfalls.

📝 In Summary: What to Expect From Budget 2026

For Taxpayers:

· Continued push to refine the new tax regime with higher exemptions and deductions.

· Potential increase in standard deduction to improve take‑home pay.

· Requests to restore or expand deductions for loans and long‑term savings/insurance.

For Homebuyers:

· Calls to increase home loan interest and principal repayment deductions.

· Demand for GST rationalisation and affordable housing support.

· Efforts to redefine benefits so more buyers qualify, especially in the middle‑income segment.

As Budget 2026 draws near, both taxpayers and the housing sector will be watching closely to see if relief measures deliver real financial impact and help revive demand in key areas of the economy.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.