The Finances is awaited yearly by particular person taxpayers with the hope of some relaxations and tax pleasant insurance policies. Nonetheless, the eagerness for the Finances this 12 months has by no means been seen earlier than particularly given the present pandemic scenario, which has led the widespread taxpayer to fervently hope for incentives and tax cuts to manage up with the unprecedented scenario created by the pandemic.
Final 12 months, Finances 2020 launched the idea of simplified tax regime offering decrease tax charges however with restricted exemptions and deductions. Taxpayers had the choice to decide on between the present regime and the newly launched simplified tax regime. Although simplified tax regime had decrease tax charges, the affect of such profit was not accessible uniformly primarily attributable to denial of most exemptions and deductions. Therefore, the widespread taxpayer expects the federal government to herald some parity between the 2 regimes by together with some extra deductions/exemptions within the simplified tax regime.
Part 80C accounts for a lot of the tax financial savings of people. The present cap of INR 1.5 lakhs doesn’t present a lot scope to taxpayers to diversify their funding portfolio and on the similar time leverage on tax advantages. The restrict underneath part 80C has remained fixed from nearly 6 years. The federal government can take into account mobilising public financial savings by rising restrict underneath part 80C from INR 1.5 lacs to INR 2.5 lacs on the minimal.
The Nationwide Pension Scheme (NPS) gives many benefits however it’s nonetheless not the popular alternative for a lot of compared to different retiral schemes. It’s anticipated that the ceiling of deduction in the direction of NPS accessible underneath part 80CCD(1B) for particular person contribution be elevated from INR 50,000 to INR 100,000 per tax 12 months in order to encourage individuals to affix this scheme. Additional, to herald parity, the tax-free employer contribution to the Nationwide Pension Scheme for the non-public sector staff must also be raised to 14%, as is the case for Central Authorities staff.
Resulting from Covid-19 the price of medical care has gone up considerably making medical insurance coverage a necessity. To encourage enough cowl, the federal government ought to have a look at rising the restrict underneath Part 80D from the present INR 25,000 to INR 50,000, with the necessity to additional re-look on the restrict for senior residents.
At the moment, long run capital features arising from sale of listed securities over INR 1 lakh are taxable at a flat price of 10%, with out indexation. The long-term traders face hardship attributable to taxation of those features with out contemplating the affect of inflation. Therefore, to advertise funding within the fairness market, the expectation is to cut back the tax price for long-term capital features to five%, and the edge to be elevated to INR 2 lakhs.
Presently, the deduction for curiosity in relation to self-occupied property and general loss set-off from home property with different earnings is proscribed to INR 200,000. Contemplating the Covid-19 pandemic, this deduction/ set-off could also be elevated to INR 300,000 such that the disposable earnings within the arms of tax payers will increase, which can doubtlessly assist increase consumption.
‘Do business from home’ (WFH) is the brand new regular because of the pandemic. Additional, extra employers are encouraging the WFH tradition because it reduces transportation value, travelling time and will increase work life steadiness. Nonetheless, staff are incurring extra expenditure like enhanced broadband prices, working furnishings, and so on. To cowl such bills, it is just honest for the federal government to introduce a deduction to cowl the extra bills of salaried taxpayers.
Final 12 months, after the outbreak, the federal government issued a round to exclude the variety of days between 22nd March 2020 to 31st March 2020, so as to decide the residential standing of people who visited India and have been stranded throughout that interval owing to journey restrictions. The federal government is predicted to come back out with an analogous reduction for FY 2020-21 additionally to supply reduction for stranded particular person taxpayers in India.
Particular person taxpayers are hopeful that the Finance Ministry goes to supply due incentives to widespread man within the upcoming Finances to provide reduction from the pandemic. Whether or not all such expectations might be fulfilled stays to be seen.
The weblog has been co-authored with Preeti Gupta, senior supervisor and Amanpreet Kaur, deputy supervisor with Deloitte Haskins and Sells LLP
Views expressed above are the writer’s personal.
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