Salary and Pension Likely to Rise, Income Up to ₹12 Lakh Tax-Free; 7 Major Changes Ahead
New Delhi | December 31, 2025 | DeccanLive.com
The upcoming year is likely to bring major financial relief for common people, including central government employees, pensioners, taxpayers, and consumers. From higher salaries and pensions to tax-free income up to ₹12 lakh, several important changes are expected to come into effect in 2026.
Here are the 7 big changes that may impact your money and daily life:
- Salary and Pension Likely to Increase
The central government has announced the 8th Pay Commission, which is expected to be implemented from January 2026. Its main aim is to revise salaries, pensions, and allowances of central government employees.
For example, an employee with a basic salary of ₹35,400 under the 7th Pay Commission currently earns around ₹65,500 after allowances. Under the 8th Pay Commission, this amount could cross ₹1.1 lakh, depending on the fitment factor.
- CNG and PNG Prices to Come Down
From January 1, 2026, CNG and domestic PNG prices are expected to drop by ₹2 to ₹3 per unit. This follows a reduction in gas transportation charges announced by the Petroleum and Natural Gas Regulatory Board (PNGRB).
- Income Up to ₹12 Lakh to Be Tax-Free
Under the new tax regime for FY 2025–26, income up to ₹12 lakh will be fully tax-free. For salaried employees, with a standard deduction of ₹75,000, the exemption limit increases to ₹12.75 lakh. Earlier, the tax-free limit was ₹7 lakh.
Tax experts say people earning ₹12 lakh annually can save up to ₹60,000 in tax, while those earning ₹10 lakh may save around ₹40,000.
A new 25% tax slab has also been introduced for incomes between ₹20 lakh and ₹24 lakh, offering relief to the middle and upper-middle class.
- Interest Rates on Small Savings May Fall
Interest rates on small savings schemes like PPF and others may be reduced. This is because the RBI has cut the repo rate to 5.25%, and government savings schemes often follow this trend.
- Car Prices May Increase
Car prices may rise by 2–3% from January 1. Companies like MG, Maruti, Tata, Hyundai, and luxury brands such as Mercedes and BMW have either announced or are expected to announce price hikes due to rising input costs.
- Aadhaar Mandatory for Railway Ticket Booking
From January 12, IRCTC users without Aadhaar-linked accounts will not be able to book reserved train tickets between 8 AM and 12 midnight on the first day of booking. This rule aims to prevent misuse and ensure fair access to tickets.
- New Income Tax Act from April 2026
A new Income Tax Act, 2025 will come into force from April 1, 2026, replacing the old 1961 law. The new law is written in simpler language, making it easier to understand and file returns. While tax rates remain unchanged, processes will become more transparent and digital.
How Common People Will Benefit
- Easier understanding of tax laws
- Faster tax refunds
- Less harassment due to faceless and digital systems
- Clear rules on deductions like pension, gratuity, and house property
What benefit will the common man get?
- The law is in simple language, making it easier to understand and file ITR independently.
- Faceless assessment and digital processes will reduce hassle and minimize chances of corruption.
- Refunds will be processed faster, and certain deductions (such as pension and house property) have been clarified.
