Budget 2026 Expectations: Senior Citizens May Get Healthcare and Interest Income Tax Relief, Says Deloitte’s Tarun Garg
As expectations build ahead of the Union Budget 2026, Deloitte India Executive Director Tarun Garg has indicated that senior citizens could emerge as key beneficiaries, particularly through healthcare-related tax deductions and possible relief on interest income.
Speaking to news agency ANI on January 18, Garg said the upcoming Budget is likely to focus on fine-tuning the new income tax regime rather than announcing sweeping reforms, citing limited fiscal space available to the government.
The Union Budget for FY 2026–27 will be presented in Parliament on February 1 by Finance Minister Nirmala Sitharaman.
Budget 2026: Focus on Targeted Income Tax Relief
According to Garg, the Centre may prioritise targeted and practical tax relief measures, especially for individuals, instead of major changes to tax slabs or rates.
“I don’t see path-breaking or huge changes. It will be more of fine-tuning within the new tax regime,” Garg said.
Senior Citizens Likely to Benefit
Garg noted that rising healthcare costs could prompt the government to offer additional medical expense deductions for senior citizens in Budget 2026.
“Medical expenditures are increasing, and senior citizens are spending more on healthcare. Some additional deductions may be provided to ease this burden,” he said.
Such a move could offer meaningful relief to elderly taxpayers facing inflation and higher living costs.
Possible Relief on Interest Income
The Deloitte executive also highlighted the growing demand to increase deductions on interest income earned from bank deposits and small savings schemes.
Currently, deductions are capped at:
₹10,000 for non-senior citizens
₹50,000 for senior citizens
“There is a vast majority of individuals asking for higher limits. Increased exemptions on interest income could help senior citizens manage inflation,” Garg added.
Provident Fund Changes Under New Tax Regime
Another potential reform could involve making provident fund (PF) contributions employer-driven under the new tax regime.
“Provident fund is structured through the employer and does not require additional proof submission. This could help bridge the gap between the old and new tax regimes without increasing compliance,” Garg said.
Standard Deduction May See a Hike
Garg also pointed to the standard deduction as an area where limited relief could be introduced, especially under the new tax regime.
“The standard deduction under the new tax regime may be increased by ₹25,000 or more,” he said.
Such a change would benefit salaried taxpayers without reopening income tax slab rates.
Income Tax Rates Unlikely to Change
On tax rate rationalisation, Garg struck a cautious tone, saying major changes are unlikely.
“From a rate perspective, I don’t see much happening,” he said.
However, he did note that minor tweaks to surcharge rates could be considered to address inflation-related concerns, though clarity will only emerge on Budget day.
Digitisation Improving Tax Compliance
Garg also highlighted improvements in tax compliance driven by digitisation, particularly through tools like the Annual Information Statement (AIS) and Tax Information Statement (TIS).
“At least 50–60% of taxpayer information is already pre-filled, which saves significant time,” he said.
However, he urged taxpayers to carefully verify pre-filled details to avoid errors or duplicate taxation.
Budget 2026 Outlook
Overall, Garg believes Budget 2026 will prioritise targeted relief, administrative efficiency, and compliance ease, rather than broad personal income tax reforms.
With February 1 approaching, taxpayers—especially senior citizens and salaried individuals—will be closely watching for these expected fine-tuning measures.
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