Union Budget 2026: How FM Nirmala Sitharaman tweaked Section 87A in 2025 and reshaped rebate mechanism
Union Budget 2025 introduced a major reset in personal income taxation by significantly expanding the rebate under Section 87A, reshaping how middle-income earners are taxed. As Budget 2026 approaches, the enhanced rebate has emerged as a key driver of the government’s push toward the new tax regime. The changes have altered tax calculations for millions of individual and salaried taxpayers, increasing effective tax-free income without revising slab rates.
Union Budget 2025 introduced a major reset in personal income taxation by significantly expanding the rebate under Section 87A, reshaping how middle-income earners are taxed. As Budget 2026 approaches, the enhanced rebate has emerged as a key driver of the government’s push toward the new tax regime. The changes have altered tax calculations for millions of individual and salaried taxpayers, increasing effective tax-free income without revising slab rates.
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