Union Budget 2021: The frequent taxpayer may well anticipate some important rationalization in earnings tax slabs and prices.
Budget 2021 Income Tax: The frequent taxpayer is anticipated to be glued to the Finance Minister Nirmala Sitharaman’s Budget 2021 speech. After the dip in the development price of the economy in 2020, the government is anticipated to take some important actions to kick-start out the economy and bring the demand back to the pre-Covid levels.
And, that signifies raising more income from the numerous obtainable sources. As far as earnings tax is concerned, will there be any rationalization in earnings tax slabs and earnings tax prices? Or, ought to taxpayers anticipate a reduce in the tax prices? “While such a move would bring cheer to the common man and also to the markets, one needs to keep in mind that the government’s finances are extremely stretched given the current economic environment. As a result, one should not expect any major rationalization in the income tax slabs or rates,” says Sameer Kaul, MD & CEO, TrustPlutus Wealth Managers (India).
The FM in Budget 2020 had currently introduced the New Tax Regime as an option to the current tax regime for the taxpayers to decide on from. Some taxpayers will stand to achieve by opting for the NTR but more than that it sends a signal that the government desires to decrease exemptions more than the extended term. “If the finance minister provides a roadmap for reduction of income tax rates over the next few years, that also may be taken positively. A similar roadmap was provided with regard to corporate tax rates during the previous regime (2014-2019) of the same government,” adds Kaul.
The Union Budget 2021 in itself is becoming looked upon as a as soon as-in-a-lifetime price range physical exercise. “The Finance minister has described the upcoming budget as a ‘never before’ event given that it will be presented in the backdrop of the pandemic. The FY22 Budget may focus on government spending to aid economic recovery. It may focus on infrastructure buildup which is a growth multiplier,” says Kaul.
Retail investors and the frequent taxpayer will also have an eye on the new Budget 2021 announcements by the FM that can aid them save tax and also develop their savings for their extended term targets. “Given that the government finances are currently stretched, the FM could announce certain savings schemes or bond issuance like tax-free bonds to raise resources to fund such government expenditure. Such measures will also encourage investments from retail investors into such schemes or bond issuance. Any rationalization of capital gains taxes or STT will also boost sentiment with regards to investments,” informs Kaul.