Budget 2026 Analysis: Unresolved Tax Complexities and Procedural Hurdles for the Assessee
Despite the government's repeated assurances of simplifying the taxation structure, Budget 2026 has faced significant criticism for failing to address the practical, on-the-ground challenges faced by the common assessee. The fiscal policy continues to navigate between two competing tax regimes, resulting in a convoluted framework rather than a streamlined one.
The persistence of dual regimes—characterized by disparate exemption limits, varying slab rates, and distinct rebate mechanisms—has arguably compounded confusion. Furthermore, procedural bottlenecks regarding rectification and condonation continue to plague the system, often leaving the assessee at a disadvantage compared to the revenue authorities.
The Dual Regime Dilemma: Complexity Over Clarity
The Income Tax Act 2025 maintains two distinct methods for calculating tax liability. While the New Tax Regime (NTR) is touted as the default and simpler option, the structural differences create a difficult choice for the assessee.
New Tax Regime Slabs
Under the current provisions for Individuals, HUFs, and other applicable categories, the tax incidence is nil up to Rs. 4,00,000. The subsequent slabs are as follows:
- Rs. 4,00,001 – Rs. 8,00,000: 5%
- Rs. 8,00,001 – Rs. 12,00,000: 10%
- Rs. 12,00,001 – Rs. 16,00,000: 15%
- Rs. 16,00,001 – Rs. 20,00,000: 20%
- Rs. 20,00,001 – Rs. 24,00,000: 25%
- Above Rs. 24,00,000: 30%
The Rebate Disparity (Section 156)
A significant point of contention lies in the application of rebates under Section 156.
- Old Regime: Residents with a total income up to Rs. 5 lakh are eligible for a 100% rebate or Rs. 12,500, whichever is lower.
- New Regime: Residents can claim a rebate of up to Rs. 60,000 for incomes up to Rs. 12 lakh.
Critically, the New Tax Regime fails to offer specific relief or distinct higher exemption limits for Senior Citizens (60+) or Super Senior Citizens (80+), treating them on par with general citizens.