Tax relief already delivered, says Economic Survey:
Experts decode what Budget 2026 is likely to offer on income tax and beyond

Jan 29, 2026

Synopsis
India's Economic Survey reveals significant tax relief for households has been provided, with the fiscal deficit falling below target. Experts offer differing views on future tax cuts, with some suggesting a shift towards stability and incremental rationalization rather than sweeping rate reductions. The survey emphasizes delayed gratification for long-term national gain.

The Economic Survey released on January 29, 2026 said that significant tax relief for households has already been provided and India’s fiscal deficit is below the set target.A fiscal deficit occurs when the government's total expenditure exceeds its total revenue from sources like tax, disinvestment, etc (excluding borrowings) during a fiscal year, which shows that the government needs to borrow more to cover the shortfall.

The government sets a target for fiscal deficit, which is the comparison between the money it spends versus what it collects. A deficit denotes that the government is spending more money than it is taking back through collections like tax, bonds, etc), meaning more money is flowing into the economy and to the people.

The Economic Survey said: “The government announced significant tax breaks for households in the budget for fiscal year 2026 (FY26) in February. It achieved a fiscal deficit of 4.8% of GDP, against the budgeted 4.9%, and announced a target of 4.4% for FY26, fulfilling the promise made in 2021 to reduce the Union fiscal deficit by more than half from 9.2% in FY21.”

This wording seems to imply that middle-class taxpayers ought to peg their expectations to current relief measures rather than expecting recurring cuts in tax slabs. Still, experts have differing opinions.

Akhil Chandna, Partner and Global People Solutions Leader, Grant Thornton Bharat, told ET Wealth Online that the Economic Survey 2025-26 suggests that the phase of large, recurring personal tax giveaways is likely behind us.

Chandna says: “With direct-tax buoyancy improving and fiscal consolidation remaining a priority, future budgets are more likely to focus on incremental rationalisation rather than sweeping rate cuts. The emphasis appears to be on preserving stability in the tax framework rather than introducing disruptive relief measures every year.”

According to Chandna, the Economic Survey wordings seem to point towards policy continuity in case of personal taxation. Middle-class taxpayers should anchor expectations around existing relief and a stable slab structure and not expect repeated slab cuts.

Chandna says: “The policy focus has shifted to predictability, compliance and simplicity, with household confidence being supported through stability rather than frequent tax changes.”

Another chartered accountant highlights how despite significant tax breaks, the actual fiscal deficit has remained below the budgeted figures, which is a welcome measure. This shows that there is more scope for passing on relief to the household, and not an indication to withdraw the reliefs already granted or restricting reliefs in the future.”

Though the Economic survey is not an indication of future budget measures, it has acknowledged, on numerous occasions, that the increase in household consumption is aiding the growth wave momentum. There will more likely be efforts to increase household consumption, than expected burden on them.”

Delayed gratification is beneficial

V. Anantha Nageswaran, Chief Economic Advisor Government of India, in the Economic Survey quoted Yama's message in the Katha Upanishad and said that it is timeless: every moment asks us to choose between Śreya, the enduring good, and Preya, the fleeting comfort. The mature mind chooses Śreya; the immature mind settles for Preya.

In other words, the country stands to gain immensely when all of us embrace delayed gratification.

The Economic Survey said that the global environment is being reshaped by geopolitical realignments that will influence investment, supply chains and growth prospects for years to come.

Against today’s global churn, India must choose to build resilience, innovate relentlessly, and stay the course toward Viksit Bharat, rather than seek quick fixes to visible, short-term pressures. The good news is that, on balance, the evidence presented in this Survey shows that India will choose well.

[The Economic Times]