Taxpayers are expecting a lot of incentives from Budget 2021, especially since it comes amid the Covid-19 pandemic, which has caused a massive disruption in economic activity.
Many salaried employees lost their jobs, leading to an unprecedented fall in credit demand and financial well-being.
Here's a wish list of tax incentives we want from Budget 2021.
#1 Simplification of tax laws & ease of compliance
The government has continuously moved towards the process of simplification of tax rules and ease of compliance in the last few years. Various steps have been taken to simplify compliances such as faceless assessments, issuance of refunds electronically, the Taxpayers’ Charter among others. This Budget is expected to take the journey forward by further simplifying compliance requirements and processes.
#2 Increase 80C limit to boost savings
Taxpayers expect that the 80C deduction limit of Rs 1.5 lakh could be increased to at least Rs 3 lakh. The pandemic, which resulted in job losses and pay cuts, drove home the importance of having strong financial savings during times of need. The limit of Rs.1.5 lakh was last revised in Budget 2014-15. Increasing this limit will incentivise people to save more for their long-term financial health.
#3 Deduction for medical expenditure for all
As per current tax laws, deduction for medical expenses of upto Rs 50,000 is available only for expenses incurred on or by senior citizens who don’t have health insurance. Considering the soaring medical expenses, especially on account of Covid-19 , the Budget should introduce such deductions for all who do not have health insurance.
#4 Incentivise purchase of affordable housing
For first-time home buyers, currently an additional deduction of up to Rs 1,50,000 is allowed for interest paid on loans to purchase a residential house property. This is in addition to the deduction of Rs 2,00,000 which is available for interest paid on housing loan. Amendments can be brought in here to incentive purchase of such assets even where a loan is not availed.
#5 Imposition of Covid cess for high-income groups
The government could levy a special one-time cess on taxpayers falling in the 30% slab rate to gather resources to meet the increased government spending on account of the pandemic.
Extraordinary times call for extraordinary measures. Taxpayers hope that Budget 2021 will bring some cheer, keeping in mind the needs and aspirations of the nation as well as its citizens.