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Budget 2026: New Tax Regime May Get Home Loan, Health Insurance Deductions
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Budget 2026 may bring middle-class relief as experts urge adding home loan interest and Section 80D health insurance deductions to the new tax regime
At present, most popular deductions are available only under the old tax regime. (AI-Generated Image)
As the Centre prepares to present the Union Budget in February 2026, expectations are building around possible changes to the personal income tax framework, with policymakers facing mounting pressure to make the new tax regime more attractive for middle-class taxpayers.
A key demand emerging from tax experts and industry bodies is the inclusion of select deductions, particularly home loan interest and medical insurance premiums, within the new regime. At present, most popular deductions are available only under the old tax regime, prompting many taxpayers to forgo lower tax rates in favour of exemptions and deductions.
According to reports in The Economic Times, experts have urged the government to consider allowing Section 80D deductions for health insurance in the new regime. Niyati Shah, Chartered Accountant and Personal Tax Head at 1 Finance, said a capped deduction of Rs 25,000 to Rs 50,000 for health insurance premiums would be justified, given that medical inflation is running at an estimated 12-14% annually.
Viswanathan Iyer, Senior Associate Professor at the Great Lakes Institute of Management, Chennai, told TOI that for an individual earning Rs 15 lakh annually, a standard or health insurance deduction of Rs 1 lakh could translate into tax savings of about Rs 4,000.
Another report suggested that Section 80D should be made available under both tax regimes, with higher limits for senior citizens. Business Standard quoted Shah as saying that the policy focus should be on healthcare, housing and retirement, recommending a simple flat deduction for home loan interest or house rent allowance (HRA), along with a capped health insurance benefit.
SR Patnaik, Partner and Taxation Head at Cyril Amarchand Mangaldas, proposed higher interest deductions on savings and fixed deposits and an upward revision of the income threshold for the 30% tax slab.
Housing-related tax relief has also emerged as a major talking point. Reports in The Financial Express and by trading platform Upstox quoted experts, including Abhishek Soni, as calling for an increase in the home loan interest deduction under Section 24(b) from the current Rs 2 lakh-Rs 3 lakh, citing rising property prices and higher EMIs. The Institute of Chartered Accountants of India (ICAI), in its pre-Budget memorandum, has recommended allowing Section 80D deductions in the new regime to improve health insurance penetration.
The debate has spilled over to social media, where Budget 2026 has become a trending topic. Financial expert Sumit Kapoor (@moneygurusumit) posted on X that health insurance deductions under Section 80D could return to the new regime, along with partial home loan benefits, potentially pushing effective tax-free income up to Rs 17 lakh.
CA Himank Singla echoed similar expectations, citing possible standard deductions of Rs 1–1.5 lakh, health insurance benefits and home loan relief. Journalist Ninad Sheth suggested that substantial interest deductions on home loans and GST benefits for affordable housing were “almost certain”, while some users speculated that the home loan interest cap could be raised to as much as Rs 5 lakh.
Currently, the new tax regime offers lower tax rates but virtually no deductions, apart from a standard deduction of Rs 75,000 for salaried employees. In contrast, the old regime allows deductions of up to Rs 2 lakh on home loan interest and up to Rs 25,000 on medical insurance premiums under Section 80D, rising to Rs 50,000 for senior citizens.
For the ongoing framework, income up to Rs 12 lakh is effectively tax-free under the new regime due to an enhanced rebate under Section 87A, extending to Rs 12.75 lakh when the standard deduction is factored in. On an annual income of Rs 15 lakh, the tax liability under the new regime works out to about Rs 1.56 lakh after deductions.
Experts argue that if limited deductions such as home loan interest and health insurance premiums are allowed within the new regime, taxpayers could benefit from both lower rates and meaningful relief. For instance, a Rs 2 lakh home loan interest deduction could reduce taxable income by the same amount, resulting in tax savings of Rs 60,000 for someone in the 30% slab. A Rs 25,000 health insurance deduction would save another Rs 7,500. If higher caps are introduced, savings could rise substantially.
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January 21, 2026, 20:09 IST
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Reopening the Strait of Hormuz is “the best thing to do” to prevent interest rates rising, Bank of England governor Andrew Bailey has said.
In an interview on Thursday evening after the Bank’s Monetary Policy Committee (MPC) voted unanimously to leave the rate unchanged at 3.75%, Mr Bailey said any further cuts are “not on the horizon” as he hinted at possible hikes.
It is the first time that all members have voted the same way since September 2021.
Iran effectively closed the vital oil and gas shipping route after the US and Israel attacked the country, which has pushed up global prices.
Mr Bailey said the war in the Middle East is hitting petrol pumps now, will likely increase household energy costs in summer, and put pressure on food prices.
He told LBC’s Andrew Marr: “The duration of this problem is crucial.
“I would also say very clearly that the best way to solve this situation is not through monetary policy. It is through sorting out at the source of what’s going on.
“Frankly, reopening the Strait of Hormuz is the best thing to do. Get the energy market back on its normal footing, as it were.”
Asked if he has a message for US President Donald Trump, Israeli Prime Minister Benjamin Netanyahu, and “whoever’s in charge in Tehran”, Mr Bailey said: “The best thing we can do actually for the world economy… is to sort out the problem in terms of reopening the energy supply lines, because that is in the best interest of people in the world.”
UK military planners have joined the US Central Command to help formulate proposals for opening the Strait.
The MPC now expects Consumer Prices Index inflation to be around 3% in the second quarter of 2026, up from the 2.1% that had been forecast in February, with a potential rise in inflation up to 3.5% in the third quarter.
Mr Bailey was asked if he foresees, in the final two years of his term, the ambition to reduce inflation to at or below 2% being fulfilled.
He told the programme: “If you’d asked me this question three weeks ago, I was very optimistic on this.”
The governor added: “We are fully committed to the inflation target, and our job, frankly, is to deal with the shocks as they come along.
“I have to do that. I don’t wish them. I wish they were not happening, but they are and we will have to deal with them.”
He said the impact of the war will likely feed through into a higher Ofgem energy price cap from July.
It was put to Mr Bailey that the Middle East crisis comes at a time when the UK economy has already “not been growing strongly”.
He responded: “It is a very difficult time to have this happen, but frankly, any time would be pretty difficult to have this happen.
“This is a major shock to energy prices, and we have to deal with it.”
He said the “sustainable rate of growth” in the UK needs to be raised which could come from investment from pensions and artificial intelligence.
“I’m not starry-eyed about it, but it is probably the most likely area that we’re going to raise the growth rate of the economy and that’s important”, he said of AI.
The MPC signalled that if the conflict persists and has a bigger impact on UK prices, it would need to take a “more restrictive policy stance”, which indicates higher interest rates to control inflation.
The governor added: “The longer it goes on… I’m afraid to say, but it is rather an obvious point, the effect will be larger.”
He said that is why it is “imperative” that “everything is done that can be done to alleviate this effect”, adding: “That is the critical thing.”
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March 19, 2026
Business
FDA approves higher dose version of weight loss drug Wegovy as Novo Nordisk tries to win back market share
The logo of pharmaceutical company Novo Nordisk is displayed in front of its offices in Bagsvaerd, Copenhagen, Denmark, Feb. 4, 2026.
Tom Little | Reuters
The Food and Drug Administration on Thursday approved a higher-dose version of Novo Nordisk‘s blockbuster weight loss injection Wegovy, as the company pushes to win back market share from chief rival Eli Lilly.
Novo expects to launch the higher, 7.2-milligram dose of Wegovy in April. The Danish drugmaker is positioning that version to better compete with Lilly’s obesity drug Zepbound, which has proven to be more effective at promoting weight loss than the standard, 2.4-milligram dose of Wegovy.
That higher efficacy has helped Zepbound become the preferred obesity medication among prescribers and patients, even though it entered the U.S. market later than Wegovy, and has solidified Lilly’s position as the dominant player in the space.
The high-dose Wegovy helped patients with obesity lose an average 20.7% of their weight after 72 weeks in a phase three trial. The standard dose of Wegovy has shown around 15% weight loss on average in clinical trials.
“I think it really makes it more competitive, and it really reduces the delta there,” Dr. Jason Brett, principal U.S. medical head at Novo Nordisk, said in an interview Thursday ahead of the approval.
“But even more importantly, I think it just gives patients another option if they’re not reaching their targets, and achieving some of these higher weight losses for certain patients,” he added.
In a separate phase three trial on patients with obesity and Type 2 diabetes, high-dose Wegovy demonstrated an average weight loss of 14.1%. People with diabetes typically have a harder time losing weight than people without the condition.
It marks the first approval of a GLP-1 treatment under the FDA’s new national priority voucher plan that aims to cut drug review times to one to two months for companies the agency says are supporting U.S. national health priorities. The FDA launched the pilot plan in June.
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