Expectation of the Union budget 2021: higher tax exemption limit
New Delhi: The economic downturn spearheaded by Covid-19 has seriously impacted consumer confidence while undermining the discretionary purchasing power of millions through job losses and the closure of many small and medium-sized businesses.
Political measures by Finance Minister Nirmala Sitharaman in the Union budget 2021-22 in the area of direct taxes can, however, make a great contribution to the support of the aam aadmi or the common man. There are many expectations of this budget in terms of reforms and concessions in the direct tax law.
The government is expected to introduce easing such as higher limits on income tax exemptions that allow for improvement in the micro and macro fronts while taking into account liquidity constraints. The following is to be expected with personal and non-personal tax measures.
In the case of the existing tax system, the tax exemption threshold should be increased from 2.5 to 5 lakhs for a normal person, from 3 to 6 lakhs for senior citizens, and from 5 to 8 lakhs for senior citizens. The case of the super senior and the tax rate should be 10% for Income up to 10 lakhs, 20% for incomes over 10 lakhs, but up to 20 lakhs, 30% for incomes over 20 lakhs is Kapil Rana, Founder and Chairman of HostBooks.
According to Rana, in addition to the threshold, the following should also be considered:
- The threshold limit for the standard salary deduction should be increased from the existing Rs 50,000 to Rs 100,000.
- The threshold for the standard deduction from the family pension should be raised from the current 15,000 to 50,000 rupees.
- The threshold limit for the deduction of interest on home loans should be raised from the current 200,000 to 500,000 rupees.
- The threshold exemption limit for the education of children or the dormitory allowance should be increased from the existing Rs 100 / Rs 300 to Rs 1000 / Rs 3000 per month.
- The threshold exemption for the layoff payment or the amount an employee receives under a voluntary retirement plan should be increased from the existing Rs 500,000 to Rs 150,000.
- The exemption limit for the value of a gift on ceremonial occasions or otherwise should be increased from the existing Rs 5,000 to Rs 25,000.
- The threshold limit for Section 80C, 80CCC and 80CCD deduction should be increased from the existing Rs 150,000 to Rs 500,000 to encourage investment.
Due to the COVID-19 pandemic, health screening expenses (i.e., medical testing expenses) are increasing day by day. Taking into account this consideration limit for the preventive medical examination according to Section 80D, the existing Rs should be increased compared to the existing Rs. 5,000 to Rs 100,000, Rana added.
Some deduction or exemption should also be granted for work from household expenses, as employees have to incur additional expenses for working from home, such as household expenses. B. Telephone costs, Internet costs, etc.
The threshold of section 80D should also be raised because people pay a premium on the higher side due to increasing hospital costs every day, but the corresponding deductible amount does not increase.