Union Budget 2021 Expectations for Salaried: Finance Minister Nirmala Sitharaman although presenting the Budget 2021 may possibly make the salaried class in the nation wait for some optimistic announcements. For the staff, 2020 has been a watershed year – From spend-cuts to job losses, the going has been hard for the 9 to 5 workplace goers. The expectations variety from an improve in normal deduction limit, healthcare insurance coverage advantage, tax exemptions, rebates to improve in the Section 80C limit.
The lockdown in the nation virtually coincided with the start off of the new monetary year 2020-21. This straight impacted the re-reimbursement that quite a few staff obtain from their employers. Such reimbursements turn into taxable unless backed with the bills as proof of spending. Restricted movements across the nation therefore produced the meals bills, entertainment and petrol bills and so on out of attain for the most period. To add to the misery of the staff, there had been spend-cuts witnessed in most providers.
“During the current year, salaried personal have faced significant challenges of a VRS or retrenchment and pay cuts. Further on account of the lockdown the possibility of claiming tax exemptions for HRA, LTA car fuel reimbursement were limited. Hence the incidence of taxes was high in many cases. Given these situations, the government can certainly look at enhancing the exemption for VRS and retrenchment to enable employees to get more in hand. Further enhancing the standard deduction could provide some respite to the tax weary salaried class. The special deduction for medical insurance premiums and medical expenses itself can be introduced,” says Aarti Raote, Partner, Deloitte India.
For the assessment year 2021-22, can the staff count on some relief on the tax front. “Government should make provision to provide temporary tax breaks to individual taxpayers who have experienced pay cut or job losses. These could be in the form of tax rebates or exemptions, especially for the impacted individual taxpayers, in order to help them weather the impact of income lost during this crisis,” says Col Sanjeev Govila (Retd), a SEBI Registered Investment Advisor (RIA), and CEO, Hum Fauji Initiatives, a monetary preparing firm which caters exclusively to armed forces officers and their households.
The actual advantage may possibly come up if the government increases the normal deduction limit. “Medical reimbursement and travel allowance exemption were done away with from FY 2018-19 in lieu of standard deduction. To keep pace with the ever-rising medical and fuel costs, the standard deduction is expected to be increased from Rs 50,000 to Rs 1,00,000. Further, it is expected that the benefit of standard deduction should also be available to taxpayers opting for taxation under the new regime as well,” says Raghunathan Parthasarathy, Associate Partner – Tax & Regulatory Services, BDO India.
In the new tax regime, taxpayers will have to forgo most of the revenue tax exemptions which includes Standard Deductions to avail the decrease tax prices.
Further, with the outbreak of coronavirus, the healthcare costs have noticed an improve. “The pandemic has made everybody realise the importance of health insurance. Its popularity has increased in breadth and depth amongst people. There is a need to increase the tax deduction limit to Rs 50,000 so that still more people secure their health,” says Col Govila (Retd).
When it comes to individual finances and revenue tax relief, how significantly can be anticipated to come as a relief type the government? “Overall there are many expectations, but there could be a scenario where the government may continue with the status quo and do not make any major changes when it comes to personal finance and income tax as government’s revenues have taken a considerable hit during the current financial year,” says Harshad Chetanwala, Co-Founder, MyWealthGrowth.com
For the revenue earned in FY 2020-21, taxpayers will have the alternative to opt for to file ITR as per current tax regime and slabs or opt for to opt for the new tax regime. After spend-cuts and job-market place searching unstable for the private sector staff, more saving selections that come with tax advantage can be of support.
“Increase in the income tax slab limit is long time due and something that salaried employees look forward to during every budget. Last years, new tax slabs with conditions are not working in favour of all kind of taxpayers. At the same time, inflation continues to be on the higher side and there is a high possibility that growth in income of salaried employees will be very limited in the coming year. This will have a major impact on their financial situation. There is a need for more disposable income at salaried employees end as their standard of living keeps improving and their cost of living keep increasing in most of the cities. Also, higher deduction under section 80C to avail tax rebate will also work for them as this will encourage more savings and long term investment,” adds Chetanwala.