Budget 2021 Expectations: Streamline tax laws to provide relief to salaried people

Updated: Feb 01, 2021 8:02 AM

Union Budget 2021 India: The salaried class is hoping for big positive surprises from the upcoming Union Budget.

budget 2021, union budget 2021, taxpayers budget expectations, indian union budget 2021, budget 2021-22, nirmala sitharaman, union budget 2021 news, budget 2021 india, budget 2021 expectationsUnion Budget 2021 India: The salaried class is hoping for big positive surprises from the upcoming Union Budget.

Union Budget 2021-22 Expectations for Salaried People: Salary class employees are the most affected during the Covid-19 pandemic and continuing to be the most affected ones. In the tax economy salary class employees are the maximum contributors in the terms of several taxpayers. Also, they are the real backbone of the economy. As it is generally said “one happy employee delivers million output with a smiling face” – it is true to the core. The salaried class is hoping for big positive surprises from the upcoming Union Budget.

To provide more relief to the taxpayer to recover from the situation of the Covid-19 pandemic, existing finance minister Nirmala Sitharaman should reform the direct tax law in such a manner so that it provides maximum incentives, subsidies, tax cuts, and other benefits to the common person.

Also Read: Union Budget 2021 Live Updates

In case of the current tax regime threshold, tax exemption limit should be increased from Rs 2.5 to Rs 5 lakh for the normal individual, Rs 3 lakh to Rs 6 lakh for senior citizens and Rs 5 lakh to Rs 8 lakh for super senior citizens, and the tax rate should be 10% for income up to Rs 10 lakh, 20% for income more than Rs 10 lakh but up to Rs 20 lakh, and 30% for income more than Rs 20 lakh.

Apart from the threshold limit, the following should also be taken into consideration:

• To boost the sentiment, the threshold limit of the standard deduction from salary should be enhanced from the existing Rs 50000 to Rs 100000.

• Threshold limit of the standard deduction from family pension should be enhanced from the existing Rs 15000 to Rs 25000.

• The government is pushing banks hard to increase secondary and consumer lending, and increasing the threshold limit of deduction of interest on home loans from the existing Rs 200000 to Rs 500000 will serve both purposes.

ALSO READ | Budget 2021 Income Tax Live Updates

• Threshold exemption limit of children’s education or hostel allowance should be enhanced from the existing Rs 100 / Rs 300 to Rs 1000 / Rs 3000 per month, respectively.

• Threshold exemption limit on retrenchment compensation or amount received under voluntary retirement scheme by an employee should be enhanced from existing Rs. 500000 to Rs. 1500000.

• Threshold exemption limit on the value of any gift on ceremonial occasions or otherwise should be enhanced from existing Rs. 5000 to Rs. 25000. This will help in the circulation of cash flow in both a direct and indirect manner.

• Threshold limit for deduction under section 80C, 80CCC & 80 CCD should be enhanced from existing Rs. 150000 to Rs. 200000 to promote investment.

• Due to COVID-19 expenses on account health check-up (i.e. expenditure on account of medical tests) are increasing day by day, taking into account this consideration limit of preventive health check-up under section 80D should be enhanced from existing Rs. 5000 to Rs. 20000.

• Some deduction/exemption should be given for work from home expenditure also as the salaried class person will have to incur additional expenditure on account of working from home such as telephone expenses, internet expenses etc.

• Due to the COVID-19 pandemic demand for real estate and as well as rental income is reduced. House property owners having rental income are incurring higher maintenance charges, but the standard deduction is only 30%. So, to provide support to the house property owners in this difficult situation this standard deduction of 30% should be increased.

• Rate of long-term capital gain tax which is at present at 20% should also be reduced to 10%.

• Scope of deduction of medical expenses under section 80D should be enhanced to non-senior citizens also which is presently given to senior citizens only.

• Threshold limit of Section 80D should also be increased as people are paying the premium on the higher side due to an increase in hospitalization expenses day by day, but the corresponding deduction amount is not increasing as such.

• Deduction for investment should also be allowed in case of “New Tax Regime” otherwise there will be no benefit to introducing “New Tax Regime” in case of assesses having a lesser income.

• Applicability of MAT on individuals should be removed as it is causing hardship.

• In the case of capital gain – Capital gain exemption should also be allowed in the cases where the asset is purchased in the situation where clubbing provisions are applicable.

• Scope of diseases under section 80DDB should be increased to cover more diseases including COVID-19.

• The condition to avail deduction of interest on the loan for house property under section 80EEA should be relaxed so that maximum individuals can take the benefit of this deduction. One such condition is that the stamp duty value of house property does not exceed Rs 45 lakh. This limit of Rs 45 lakh should be increased.

In the summary, there should be a budgeted benefit in terms of taxation and the availability of easy finance to employee class people.

(By Kapil Rana, Founder & Chairman, HostBooks Ltd)

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