Finance Minister Nirmala Sitharaman will present her ninth Union Budget on 1 February 2026. Over the past five years, she has reshaped India’s tax landscape by making the new regime the default, raising effective tax-free thresholds, overhauling capital gains rules, and introducing crypto taxation.
For the salaried class, the biggest anticipation around Budget Day remains one key announcement – changes to income tax.
During her tenure, Sitharaman introduced various tax reforms, including exemptions for lower-income brackets and revisions to capital gains tax. Budget 2023 made the new tax regime the default to simplify the filing process for taxpayers.
Ahead of Budget 2026, here’s a look at key reforms of the past five years.
No income tax up to ₹12 lakh
In her Budget 2025 speech, Sitharaman raised the effective tax-free threshold for salaried individuals to ₹12.75 lakh, including a standard deduction of ₹75,000. This provided significant relief to the middle class.
Earlier, Budget 2023 unveiled a simplified tax regime exempting taxpayers earning up to ₹7 lakh annually. With the standard deduction of ₹50,000, salaried individuals with incomes up to ₹7.5 lakh paid no tax under the new tax regime.
Capital gains reforms
Budget 2024 introduced sweeping changes to both short-term and long-term capital gains taxation.
The short-term capital gains (STCG) rate on certain financial assets was increased from 15% to 20%.
Before Budget 2024, long-term capital gains (LTCG) on equities exceeding ₹1 lakh were taxed at 10%. However, LTCG from properties and select non-equity assets, such as property and debt mutual funds, faced a 20% tax with indexation benefit. This benefit significantly reduced tax liability by adjusting gains against inflation-adjusted costs.
Budget 2024 made LTCG uniform at 12.5% across all asset classes, removed indexation, and raised the exemption limit to ₹1.25 lakh.
The Budget 2024 also redefined the holding period for various capital assets to qualify for LTCG and STCG. It established only two holding period thresholds: 12 months or one year for listed assets such as shares, listed bonds and equities, and 24 months or two years for other assets, including real estate and gold.
New tax regime
Budget 2020 introduced the new tax regime as optional, offering concessional tax rates but removing the benefits of certain deductions.
Budget 2023 made the new tax regime the default, requiring all taxpayers to file under it unless they opted for the old regime.
Standard deduction
In Budget 2024, the FM raised the standard deduction for salaried employees under the new tax regime to ₹75,000. She also increased the family pension deduction from ₹15,000 to ₹25,000 for those following the new tax regime the same year.
Budget 2024 introduced a new tax slab for those following the new tax regime. No tax up to ₹3 lakh; 5% tax between ₹3-7 lakh; and 10% tax between ₹7-10 lakh.
Tax on crypto assets
Budget 2022 imposed a 30% tax on virtual digital assets and an additional 1% TDS on transfers of these assets.
Re-opening of assessment
Budget 2021 reduced the time limit for reopening assessments from six years to three. In serious tax evasion cases involving concealment of income of ₹50 lakh or more in a year, assessments could be reopened for up to 10 years.
