The new versus old tax regime choice was meant to empower taxpayers. Instead, it has spawned a parallel paperwork universe.

By Nishant KhemaniEvery Union Budget comes with its share of grand announcements, but for ordinary taxpayers, the real test lies in the fine print. As Budget 2026 approaches, expectations are modest yet meaningful: simplify compliance, nudge long-term savings, and stop treating convenience as a luxury. Here are five changes that could make the tax system smarter, softer and more sensible.One return, one choiceThe new versus old tax regime choice was meant to empower taxpayers. Instead, it has spawned a parallel paperwork universe. Form 10-IE, required to opt in or out of the new regime, is a classic case of procedural overkill. Many taxpayers either forget to file it or file it incorrectly, losing out on the more beneficial regime. The fix is simple: embed the option directly into the ITR. A single return, a clear choice, no extra forms. Ease of doing business should also mean ease of filing taxes, especially for salaried individuals who neither game the system nor enjoy paperwork.Cut the sting in foreign remittance TCSA 20% TCS on foreign remittances under the Liberalised Remittance Scheme was introduced to plug tax leakages. The intent is understandable, but the dosage is excessive. For genuine remittances for family support the high TCS blocks liquidity and creates avoidable stress. A more balanced approach would be to reduce TCS to 10%, or introduce a slab system: lower rates up to, say, ₹50 lakh, and higher rates thereafter. Compliance should be encouraged, not coerced.NPS withdrawals: clarity needed on taxabilityRecent changes to NPS withdrawal rules are a welcome step. Subscribers can now withdraw up to 100% of the corpus if it is within ₹8 lakh, and 80% if it exceeds that limit. This adds flexibility and makes NPS more attractive.But there’s a catch—or rather, a question mark. Till now, only 60% of the corpus was tax-free on maturity. How will the additional 20% be taxed? The Budget should clarify this and remove the ambiguity. Ideally, the extra withdrawal should also be tax-free, reinforcing NPS as a credible retirement pillar rather than a tax puzzle.Level the NPS field under the new regimeUnder the new tax regime, deductions are scarce, making Section 80CCD(2), the employer contribution to NPS, a rare oasis. However, the additional ₹50,000 deduction under Section 80CCD(1b) is still unavailable in the new regime. Extending this deduction, and enhancing it to ₹1 lakh under the new regime, would send a strong signal. Global evidence is clear: tax incentives drive long-term savings. A stronger NPS today means lower old-age dependency and reduced fiscal pressure tomorrow.Time for joint tax returnsIndia’s tax system still treats married couples as financial strangers. Introducing joint tax returns, with a higher exemption threshold for married couples, would recognise modern household economics—especially double-income families. Such a move would put more disposable income in the hands of families, improve tax equity and align India with global best practices. After all, if households plan together, why shouldn’t they file together?In sum, Budget 2026 doesn’t need fireworks. It needs fine-tuning. Fewer forms, fairer taxes, clearer rules, and smarter incentives could go a long way in making taxation less intimidating—and more humane.(Nishant Khemani is a chartered accountant and Managing Partner of the Saturn Consulting Group)