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Higher deduction in taxable income, benefit under Section 80D expected in Budget 2021

Higher deduction in taxable income can be expected on account of increased health expense

Representational image. Image: PTI

Union Budget 2021: Expectations are mixed from the upcoming Budget. Even as Finance Minister Nirmala Sitharaman has promised a never before like Union Budget, experts are not hoping for many big ticket reforms as far as personal finance and taxation are concerned. However, some are expecting the government to introduce a COVID Cess to be levied on high-income individuals. Also, on account of the pandemic, Finance Minister Nirmala Sitharaman is expected to allow a higher deduction in taxable income on account of increased health expenses and relief in the form of tax benefit under Section 80 D.

“The government’s measures to curb the pandemic has critically drained its finances in 2020. A Covid cess is expected to be levied on high-income individuals. A definitive decision whether this levy will be in the form of cess or surcharge will be taken closer to the budget date. Though no big-ticket reforms are likely to happen this year but it is expected that the govt may introduce minor tweaks to help the tax-payer,” said Pitam Goel, Founder Partner, VPTP & Co.

ALSO READ | Income Tax exemption up to Rs 3 lakh under Section 80C among top Budget 2021 Personal Finance expectations

Section 80D Benefit

“Higher deduction in taxable income can be expected on account of increased health expenses during the pandemic. Some relief in the form of tax benefit under Section 80D of the Income Tax Act is expected,” said Goel.

According to Goel, it is also anticipated that the government might increase the Long term capital gain on the sale of shares and equity-oriented mutual funds. “Currently, MSMEs receive funding assistance under the Credit Guarantee Fund for Micro and SmalI Enterprise Scheme of the central government wherein they receive a collateral-free credit. Several MSME bodies are expecting that the collateral-free loan limit should be enhanced by the government to 5 Crore,” he said.

On GST front, Tushar Aggarwal, Founder Partner, Tattvam Advisors, said: “To boost the hard-hit sectors like tours and travel, hospitality, etc. GST rate should be decreased until normalcy is achieved. Moreover, to better the cash flows of businesses especially the MSME and real estate sector, relaxation for payment of GST on a receipt basis would be a welcome step.”

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

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