Budget 2026 expectations: Experts want home loan, medical insurance, and other beneficial deductions added to new tax regime

Introducing separate and enhanced tax benefits for OPD services and preventive health screenings, beyond the current limits under Section 80D, would encourage wider adoption of preventive care

• Experts urge more deductions in new tax regime for home loans, insurance
• Calls to raise Section 80D limits and add benefits for preventive healthcare
• Experts urge more public health funding, retirement incentives, and green projects.

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As the Union Budget 2026 approaches, tax experts are urging the government to expand the scope of deductions under the new tax regime, with home loans, medical insurance, and other key deductions emerging as top priorities.

Medical inflation continues to be one of the biggest challenges facing India’s healthcare system, projected at 11.5%–14%, among the highest in Asia. While measures such as the removal of GST on insurance premiums and allowing 100 percent FDI in insurance can improve affordability and sector resilience, rising medical costs continue to put pressure on Indian households.

Prashant Mishra, founder and CEO, Agnam Advisors, said, "Here is what I as an SEBI Registered Investment Advisor think government should focus on: Simplifying the new tax regime by integrating key deductions such as housing loan interest, medical insurance under Section 80D (raised to Rs 50,000 for self/family and Rs 1 lakh for seniors), and a potential 25% slab for Rs 30-50 lakh earners would ease compliance burdens and provide equitable relief amid rising living costs. These changes would empower families to allocate more towards productive investments rather than litigation-prone structures."

As the Union Budget 2026–27 approaches, there is an opportunity to strengthen healthcare affordability by increasing public health spending and sharpening the focus on prevention. "Currently, public health expenditure in India remains below global benchmarks and even short of the National Health Policy target of 2.5% of GDP in 2025. Enhancing the budgetary outlay for public health would strengthen primary care networks, expand preventive services, and relieve financial stress on citizens," said Srikanth Kandikonda, Chief Financial Officer, ManipalCigna Health Insurance.

"At the same time, policy measures that encourage preventive healthcare can significantly lower long-term treatment costs. Industry reports indicate that preventive care reduces hospitalisations and improves health outcomes. Introducing separate and enhanced tax benefits for OPD services and preventive health screenings, beyond the current limits under Section 80D, would encourage wider adoption of preventive care," added Kandikonda. The sections can be added to the new tax regime to provide better support to senior citizens.

Enhancing retirement savings deductions and incentives for green projects or AIFs in GIFT City aligns with sustainable, long-term strategies tailored for HNIs. "Rationalising surcharges, extending tax-neutral LLP reorganisations, and clarifying TDS on partners remuneration would streamline family office operations, fostering smoother wealth transfers across generations. Family-centric boosts, like higher allowances for elderly and child care, address demographic shifts, unlocking productivity for working professionals," said Mishra.

Shubham Gupta, CFA and Co-founder of Growthvine Capital, said, “As we get closer to the 2026 Union Budget, the focus of both taxpayers and businesses is on developing a fairer, more simplified, and predictable new tax regime, which many believe will improve household consumption and savings.”

With the new regime now the default option, expectations are rising that Finance Minister Nirmala Sitharaman may use this year’s Budget to better balance lower rates with meaningful incentives, aiming to boost home ownership, encourage insurance adoption, and strengthen household financial security.