New Delhi, Jan. 21 -- As the Union Budget 2026-27 approaches, there is growing anticipation among taxpayers and tax experts that the central government could further expand the scope of the Section 87A rebate and increase the threshold of long-term capital gains (LTCG) tax to provide greater relief to the middle class.

In the previous Union Budget, the government announced that individuals earning up to Rs.12 lakh a year, under the new tax regime, will have to pay zero tax. While this is largely true, it comes with an important caveat.

The zero tax liability is due to a rebate under Section 87A of the Income Tax Act, and it is not a blanket exemption for everyone. Those who invest in equity-based mutual funds with the aim of creating lo...