Union Budget 2021-22 Expectations for Income Tax: As the preparations for Union Budget 2021-22 are in the final stage, it is anticipated that the scope of the tax-saving investments might be enhanced, if not the limit.
Currently, the limit of tax advantages on tax-saving investments u/s 80C of the Income Tax Act is Rs 1.5 lakh, which involves a quantity of factors – like premium paid for life insurance coverage, ULIP, contributions to PPF, Sukanya Samriddhi Yojana, investments in ELSS, NSC, lengthy-term FD as effectively as payment of household loan principal, tuition costs for children’s education and so forth.
80C advantages
Too a lot of choices u/s 80C generally confuse persons on setting priority to avail tax advantages.
“Budget 2021 should announce a separate deduction for term insurance premiums to incentivise consumers to buy adequate life insurance covers. Term insurance policies allow consumers to buy large life covers at much lower premiums than other insurance products,” says Naveen Kukreja, CEO& Co-founder, Paisabazaar.com.
Tax advantages on NPS
It is also anticipated that the advantages obtainable to particular categories of investors on NPS (National Pension System) investments would be extended to other individuals and also the advantages obtainable to NPS to be extended to other investments as well.
Budget 2021 Expectations: Taxpayers want the old earnings tax regime to continue
“As a step towards improving post-retirement security among the salaried class, the tax deduction available through Section 80CCD(1B) should also be extended to investments made in pension plans offered by life insurance companies and mutual fund houses. The inclusion of these products will enhance consumer choice and bring tax parity among the pension products,” stated Kukreja.
“The NPS Tier-II Taxsaver Scheme announced in Budget 2020 for central government employees has a lock-in period of just 3 years and a fixed asset allocation of 10-25 per cent for equities and the rest in debt instruments. This year’s Budget should open this tax saving scheme to self-employed and salaried individuals working with State Governments and private sector. This will offer them an option of saving taxes under Section 80C by investing in a debt-oriented instrument, especially during overvalued equity markets,” he added.
Tax advantages on cost-effective housing
To provide incentive to cost-effective housing, it is also anticipated that the more tax advantages offered on buying such homes on loan would be continued.
Budget 2021 Expectation: More time necessary for obtaining cost-effective property to avail tax benefit
“Housing industry has a multiplier effect on jobs and core industries of the economy, and promoting affordable housing has been one of the key policy goals of this government. Hence, Budget 2021 should boost demand in the affordable housing segment by making Section 80EEA a permanent feature or at least extending it to the next financial year. Section 80EEA offers an additional deduction of Rs 1.5 lakh on home loan interest repayment to first time home buyers for purchasing housing units of stamp duty value of up to Rs 45 lakh. This deduction is over and above the Rs 2 lakh deduction on home loan interest repayment under Section 24b,” stated Kukreja.