Budget 2026 Expectations Live: Salaried employees risk double tax on employer NPS, says FIPI

"To avoid double taxation, the amount of contribution made by the employer to the NPS account of the employee can be included in total income either as salary under section 17(1)(viii) or as a perquisite under section 17(2)(vii)," FIPI stated.

FIPI experts said that double taxation can be prevented if employer contributions to an employee's NPS account are included in total income either as salary under section 17(1)(viii) or as a perquisite under section 17(2)(vii) of the Income Tax Act.

According to FIPI, the ambiguity introduced by the Finance Act, 2020, could discourage employees from opting for the National Pension System (NPS) where it is not mandatory. Concerns over double taxation or potential litigation may undermine the social objectives of the scheme.

Experts say the Finance Act, 2020, was designed to tax the portion of employer contributions to an employee's National Pension System (NPS) account that had previously been exempt, and only when such contributions exceeded the specified threshold of ₹7.50 lakh, including contributions to two other designated funds.

As Budget 2026 approaches, experts from the Federation of Indian Petroleum Industry (FIPI) have pointed to an ambiguity in tax provisions that could result in double taxation for salaried employees on employer contributions to the National Pension System (NPS).

In its Pre-Budget Memorandum for Union Budget 2026-27, FIPI noted that employer contributions to an employee's NPS account are treated as taxable salary under Section 17(1)(viii) of the Income Tax Act. However, amendments introduced through the Finance Act, 2020 also expanded the definition of 'perquisite', allowing such contributions to be taxed under certain circumstances.

FIPI experts warned that this overlap may lead to the same employer NPS contribution being taxed twice in the hands of an employee-once as salary and again as a perquisite-creating an unintended tax burden and uncertainty for salaried taxpayers.

"As India accelerates its journey towards a technology-driven future, the upcoming budget is a key opportunity to strengthen digital learning and embrace emerging technologies. Digital education has become central to modern learning, enabling students and educators to access interactive, immersive, and personalized experiences. Policies that support affordable devices, high-speed connectivity, and smart classroom solutions will be vital to bridging the urban-rural learning divide. Investing in technologies such as AI and cloud-based platforms can enhance educational quality while preparing students with the skills needed for the global knowledge economy. Incentives for technology adoption in schools and skill development centres can accelerate this transformation, creating a digitally empowered workforce. At ViewSonic, we are committed to enabling seamless digital learning experiences and supporting India’s vision of a tech-enabled educational ecosystem, ensuring the next generation is equipped to thrive in the digital age."

India’s digital economy is entering a phase where growth depends as much on trust and security as on scale. As telecom networks increasingly support everything from authentication to real‑time customer engagement, the Telecom Cyber Security Rules, reinforced by the DPDP Rules 2025, are helping organizations safeguard data and verify users, creating a clear, citizen‑centric framework for responsible data use.

This secure and compliant foundation is enabling India’s AI ecosystem to move from experimentation to measurable impact. Indigenous models under the IndiaAI Foundation Models initiative are powering agentic AI systems that can autonomously manage workflows, enhance operational efficiency, and deliver improved experiences for customers and citizens, showing how AI built on India‑specific data can transform everyday services.

As the Union Budget approaches, targeted investment, supported by strong policy measures and an enabling environment, can accelerate India’s journey toward a homegrown AI platform, strengthening the Atmanirbhar Bharat vision, fostering trusted digital engagement across sectors, and helping Indian innovations scale into globally competitive products and companies.

As we approach Union Budget 2026, the loyalty and engagement industry is looking for catalysts that will accelerate the 'Experience Economy.' We anticipate policy measures that prioritize tax rationalization for the middle class, as increased disposable income directly correlates with higher engagement in premium lifestyle and travel rewards. Furthermore, continued investment in digital public infrastructure is vital. For the loyalty sector, this means a more robust framework for secure, data-driven personalization and seamless API integrations across BFSI and retail. We also hope for incentives that encourage MSMEs to adopt digital retention tools, transforming loyalty from a 'luxury brand' feature into a core business strategy for Bharat. By balancing consumer spending power with support for the fintech-led engagement ecosystem, this Budget can solidify India’s position as a global leader in sophisticated, value-driven customer ecosystems.

Regulatory reform delivers only if we supercharge regulatory capacity. The Budget must propel regulatory reform beyond new laws, fuelling the ecosystems that make them work. For labour laws, this means aligning legislative intent with a massive digitisation push. Fragmented forms and formats need to be scrapped and replaced by unified, digital-first compliance and modernising record-keeping across establishments. Targeted allocations should power API-based infrastructure for filings, payments, notices and registrations, seamlessly plugging into enterprise systems, spawning regulated service providers and compliance tech partners. Without sustained funding for digital infrastructure, regulator re-skilling, interoperable platforms, and third-party muscle; reforms stay patchy, enforcement lopsided across states and sectors, eroding credibility despite bold policy vision. Time to build the on-ground reality.

“On a global scale, a concentrated group of AI-led firms is driving a disproportionate share of growth and capital formation. Since late 2022, fewer than 50 AI-centric companies have generated nearly 65%–75% of S&P 500 earnings and capital expenditure, while technology capex alone has fuelled over 40% of incremental US GDP growth in 2025. This shift marks AI’s evolution from an experimental phase to a cornerstone of national competitiveness and productivity. India now stands at a defining inflection point. With AI projected to inject $1.7 trillion into the economy by 2035, budget 2026 will be a primary catalyst for accelerating innovation across finance, healthcare, retail, and manufacturing.

As the IndiaAI Mission scales and India’s startup and GCC ecosystems deepen, budget 2026 must clearly recognise AI, data engineering, and applied analytics as strategic growth infrastructure. A targeted policy push—through stronger R&D incentives, AI-ready digital and compute infrastructure, clean-power data centres, and deeper public–private collaboration on skilling—can help India shift from a talent supplier to a creator of AI platforms, intellectual property, and high-value exports. This shift can unlock millions of future-ready jobs and firmly establish India as a global leader in the next phase of AI-led growth.”

The rise of Affluent+ households is fundamentally reshaping demand, with this segment expected to drive 60–65% of incremental consumption growth by 2030. Their spending patterns varies significantly by categories with a significantly higher share directed toward experiences, premium staples, health, education, travel and leisure. On a PPP-adjusted basis, average Elite household income in India is already at par with European countries. Yet, premium penetration remains well below India’s true potential, reflecting vast under-consumption across categories both in terms of value and volume. With nearly 30 Mn affluent households, the scale of untapped opportunity is compelling. Stable, predictable government policy, reinforced by Budget 2026 will be critical in sustaining consumer confidence, enabling long-term capital investment, and unlocking the next phase of India’s premium consumption journey.”, said Namit Puri, India Leader - Consumer Goods Practice, BCG

"We expect the forthcoming Budget to be judged by how effectively it converts intent into on-ground housing momentum. Across markets, we see buyers delaying decisions not due to lack of demand, but due to uncertainty around approvals, financing and post-tax costs. Introducing a single-window clearance system would directly address execution risk, while better tax incentives for first-time buyers could unlock pent-up demand at the entry and mid segments. What is equally telling is the shift we’re seeing toward Tier-2 and Tier-3 cities, where infrastructure upgrades are already reshaping buyer behaviour. If the Budget aligns tax policy with these emerging urban realities and continues to push infrastructure-led growth, it can create more predictable housing cycles rather than episodic spurts."

"The commercial real estate sector is witnessing strong momentum, powered by India’s expanding services economy and rapidly evolving consumption patterns. From Budget 2026, the industry is looking for reforms that improve ease of development, enhance affordability and encourage long-term capital deployment rather than short-term stimulus. A faster single-window clearance system, supported by GST clarity and rational taxation, would significantly improve project viability, cost efficiency and investor confidence across office and retail assets. At the same time, sustained infrastructure-led growth through investments in expressways, metro connectivity and urban mobility is essential, as improved connectivity directly drives footfall, occupier demand and asset performance. Together, these measures can accelerate the growth of India’s Grade-A offices, high-street retail and integrated commercial destinations, strengthening their ability to attract global and domestic capital while supporting employment and economic expansion."

" The industry seems to have gotten back on track, but going forward, only if the ownership base expands, meaning if the industry gets to serve more people and not just the high end, can it experience steady growth. More tax relief on loans for housing, particularly under section 80C, would be highly effective in benefiting the first-time buyer and upgrade cycles. Incentivising developers to venture into affordable housing also needs renewed attention in metro peripheries and tier-2 cities where demand is real but supply economics remain tight. Faster approvals and regulatory consistency will further improve execution quality and buyer confidence."

Together, this core team will influence decisions on taxation, employment, inflation, banking, loans and government spending. The choices made in Budget 2026 are expected to have a direct impact on the middle class-shaping salaries, savings and household expenses in the year ahead.

M Nagaraju, a 1993-batch officer and Financial Services Secretary, is overseeing policies related to the banking sector, credit flow and MSMEs. In Budget 2026, his focus is expected to be on strengthening public sector banks and improving access to credit for small businesses and exporters. These measures are aimed at supporting job creation and business growth.

Arunish Chawla, a 1992-batch officer and Secretary of the Department of Investment and Public Asset Management (DIPAM), is responsible for matters related to public sector enterprises. His role includes overseeing disinvestment and listing of government-owned companies to boost revenues. With limited room for tax-led income growth, enhancing non-tax revenues is one of his key responsibilities in the upcoming Budget.

V Vualnam, a 1992-batch officer and the Expenditure Secretary, oversees how government funds are allocated and utilised. In Budget 2026, he will play a key role in determining the direction and effective use of infrastructure funding for states, subsidies and various government schemes. His emphasis is on ensuring that public money is spent efficiently and for the intended purposes.

Arvind Shrivastava, a 1994-batch officer and the current Revenue Secretary, is central to tax-related decisions in Budget 2026. Changes to income tax, GST and customs duties fall under his purview. At a time when there is pressure to sustain tax collections, his focus is on simplifying tax laws, widening the tax base and ensuring clarity in regulations. The objective is to make the tax system more transparent, increase compliance and provide relief to both the middle class and businesses.

V Anantha Nageswaran, who has served as Chief Economic Adviser for the past four Budgets, is playing a key role in shaping the economic strategy behind Budget 2026. The Economic Survey, released ahead of the Budget, is also prepared under his guidance. His inputs are considered critical as the government works on plans to reduce debt and reinforce economic stability in the coming years.

Anuradha Thakur, a 1994-batch officer, is one of the most important members of the Budget 2026 core team. She is India's first woman Economic Affairs Secretary and is overseeing the overall framework of the Budget. Her focus areas include sustaining economic growth, managing public debt and strengthening financial markets. Going forward, the government aims to maintain a careful balance between debt levels and GDP growth, which could translate into a more calibrated approach to taxation and public spending for citizens.

Finance Minister Nirmala Sitharaman is being closely supported by Minister of State for Finance Pankaj Chaudhary, who is involved in every major Budget-related discussion. This year, the government's primary focus is believed to be on providing relief to the middle class, simplifying the tax system and maintaining fiscal discipline in government spending.

However, the Budget is not shaped by a single individual alone. A strong and dedicated team is working round the clock to design impactful policies for taxpayers, the middle class and the broader economy. Preparations are underway at North Block, where a mix of experienced officials and new faces is playing a crucial role in shaping the country's economic direction. Notably, several new appointments in key positions are expected to bring fresh thinking and a new perspective to Budget 2026.

Discussions around Budget 2026 have intensified nationwide. Key decisions related to inflation, taxation, employment, savings and the financial health of the middle class are now in their final stages. Finance Minister Nirmala Sitharaman will present the Union Budget on Sunday, February 1. This will be her ninth consecutive Budget, making her the first woman finance minister in India to achieve this milestone.

The Modi government is expected to consider easing the surcharge burden on high-income taxpayers. At present, a surcharge is levied on incomes exceeding Rs 50 lakh. However, if a joint taxation system is introduced, this threshold could be increased to Rs 75 lakh or even higher. Such a move would provide meaningful relief to families falling in the upper tax brackets and reduce the overall tax burden on household incomes.

1. Increase standard deduction for salaried employees

The Union Budget 2026 may consider increasing the standard deduction for salaried employees to Rs 1 lakh. Currently it is Rs 50,000 under the old tax regime and Rs 75,000 under the new tax regime. A higher standard deduction would help salaried taxpayers manage rising living costs. 2. Housing loan interest in the new tax regime (Section 202 of the Income-tax Act, 2025, corresponding to Section 115BAC of the Income-tax Act, 1961)

Under the current new tax regime, taxpayers cannot offset housing loan interest against salary income for a self-occupied property. Considering the burden of home loan repayments and the goal of promoting home ownership, it is recommended that the Government allow such interest deduction for self-occupied property under the new tax regime. 3. Investment incentives

It is proposed to raise the long-term capital gains (LTCG) tax exemption limit from Rs 1.25 lakh to Rs 2 lakh at the 12.5% rate. Under the new tax regime, equity-linked savings schemes (ELSS) funds and mutual fund retirement schemes could get a ₹50,000 deduction. Simplified tax treatment for hybrid funds is also suggested. (Note: these are proposals and not yet official budget changes.) 4. Relief for senior citizens

* Interest income: The threshold for TDS on interest income under Section 194A for senior citizens could be raised from Rs 1 lakh to Rs 1.5 lakh to reduce unnecessary tax deductions and ease cash flow.

* Health insurance: With high medical inflation, an increase in Section 80D limits for the old regime or a new health-related deduction under the new regime is recommended to provide meaningful relief.

As we approach Union Budget 2026, the general insurance sector is at an important inflection point where the focus has shifted from rapid topline expansion to sustainable, disciplined growth. Stronger regulatory oversight, improving claims governance, and rising customer expectations are collectively reshaping the industry into a more transparent and capital-efficient ecosystem. The budget presents an opportunity to deepen insurance penetration by improving affordability and access, particularly in underinsured segments such as small businesses, rural households and first-time buyers. Targeted incentives for micro-insurance and social sector covers, along with relief on policy-level costs for low-premium products, can materially accelerate last-mile adoption.

Budget 2026 can also play a catalytic role in strengthening India’s risk resilience by encouraging the development of climate-risk insurance solutions. Finally, continued emphasis on data-led reforms such as unified insurance data exchanges and consent-based digital infrastructure can improve underwriting accuracy, curb fraud and enhance the claims experience. A balanced mix of affordability, innovation and data-driven discipline can enable general insurers to scale responsibly while supporting India’s broader goals of financial inclusion and economic resilience - Naveen Chandra Jha, MD & CEO of SBI General Insurance

A single, flexible ITR form could allow taxpayers to first specify their category, such as individual, professional or business, and then select relevant income streams. Based on these choices, only the applicable sections and schedules would be displayed, many of them pre-filled. This approach could ease compliance, reduce errors and make tax filing more accessible for a broad range of taxpayers

Even in cases where both spouses are earning, the framework could continue to allow separate standard deductions for each individual, ensuring fairness while still offering the benefits of joint assessment.

Joint taxation could allow more effective use of deductions related to home loan interest, health insurance premiums and other allowances, improving overall tax optimisation for families.

Under a joint filing system, the combined income of the husband and wife could be assessed together, possibly under modified or separate tax slabs. Reports indicate that this could be accompanied by a higher basic exemption threshold.

Countries such as the United States and Germany follow a system where a family is treated as a single economic unit for tax purposes. In these jurisdictions, the combined income of spouses is considered while computing tax liability.

To address this issue, the Institute of Chartered Accountants of India (ICAI) has proposed the introduction of a joint tax filing option in India. The suggestion aims to align taxation more closely with the economic realities of households.

In households where one spouse, typically the wife, does not earn an income, her basic exemption limit remains unutilised, resulting in a potential loss of tax efficiency for the family as a whole.

Married couples are taxed separately, with each spouse required to have an individual PAN and file their own return. Exemptions, deductions and tax benefits are also applied independently to each person.

India's income tax framework currently treats married and unmarried individuals in the same manner. Each person is assessed independently, without any special provisions based on marital status.

The government has previously examined the feasibility of a common ITR format to make return filing simpler and more user-friendly. With the proposed introduction of the New Income-tax Act-which will require a revamp of existing return forms anyway-there is renewed scope to reconsider and implement such a reform.

Currently, taxpayers must navigate a system of seven different ITR forms, each applicable to specific categories of taxpayers. This structure often leads to confusion, particularly because the applicable form can change from year to year based on income sources and financial profiles. Choosing an incorrect form increases the likelihood of mistakes and adds to the compliance burden.

With the Budget drawing closer, anticipation among individual taxpayers is steadily building. The annual exercise typically raises hopes of rationalising tax laws and simplifying compliance. Among the many expectations, a recurring demand has once again gained prominence-the introduction of a single, unified Income Tax Return (ITR) form.

Budget 2026 will be Nirmala Sitharaman's ninth consecutive Union Budget, making her the only finance minister to have achieved this milestone so far. She is on course to equal the record held by Morarji Desai, who presented 10 Budgets, when she delivers the next one. This will also be the second full Budget of the Narendra Modi-led government's third term, after the previous Budget was presented in July following the general elections.

Union Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026 on Sunday, February 1. President Droupadi Murmu has approved the summoning of both Houses of Parliament for the Budget Session, which will commence on January 28. The session will continue until April 2, 2026, and will be conducted in two phases. The first phase will conclude on February 13, followed by a recess, after which Parliament will reconvene on March 9.