Union Budget 2021-22 for Savers: The spread of Covid-19 pandemic has impacted industries and men and women alike. As the earnings of men and women have got negatively impacted, quite a few of them are now discovering it hard to save and invest for their future economic objectives. Even paying the EMIs of residence loans and private loans has grow to be hard for a majority of persons, specifically these who have either lost their jobs throughout the lockdown or are nonetheless taking a spend reduce.
It is, hence, important to assistance such men and women and also place more dollars in their pockets not only for survival, but also to allow them to save some dollars each month. Savings and investments can also be elevated if the frequent man is offered more incentives to do that.
Keeping this in view, right here is what Finance Minister Nirmala Sitharaman can do for them in this regard in the Budget 2021:
Enhancement of deduction below Section 80C
Currently an person is eligible for a deduction up to Rs 150,000 for avenues such as PPF, tax-saver FDs, ELSS and so on. However, in most situations, employee’s contribution to Provident Fund (PF) simply exhausts this limit. “If the limit is enhanced, then the individual may consider investing in other permitted investments which will give them a tax break in the current year and increase their savings,” says Aarti Raote, Partner, Deloitte India.
Increase the limit for deduction below Section 80D
With the improve in the premium amounts due to well being complexities, men and women are essential to spend more for insurance coverage coverage and mediclaim added benefits. The pandemic has also elevated the health-related expenses and to ease this burden on the men and women, the government has to take into account escalating the limit to Rs 50,000 for self and loved ones as nicely.
Enhancement of normal deduction limit
Medical reimbursements and conveyance exemptions have been repealed with the introduction of normal deduction. “The cost of medical expenses have increased substantially with the pandemic ruling the health condition of the people and it is time for the finance minister to increase the standard deduction limit to at least Rs 100,000, which would enhance the spending power of individuals due to tax savings,” says Raote.
Rebate below Section 87A
Currently a resident person is eligible for a rebate if his/her taxable revenue is much less than Rs 500,000. However, this rebate is not accessible for Non Resident men and women. The government could treat each the groups at par.
Enhancement in the deduction for housing loan
Enhancement in the deduction for housing loan u/s 24, from the present Rs 200,000 to provide relief to workers burdened with EMIs at the time of spend cuts and retrenchments is also the have to have of the hour. The move will assistance place more dollars in the hands of savers and investors, which they can use for investment purposes.
Separate deduction for term insurance coverage premiums
The Budget 2021 should really also announce a separate deduction for term insurance coverage premiums to incentivise buyers to purchase sufficient life insurance coverage covers. Term insurance coverage policies enable buyers to purchase big life covers at a lot reduced premiums than other insurance coverage merchandise.
Extend tax deduction by means of Sec 80CCD(1B)
As a step towards enhancing post-retirement safety amongst the salaried class, the tax deduction accessible by means of Section 80CCD(1B) should really also be extended to investments created in pension plans provided by life insurance coverage providers and mutual fund homes. The inclusion of these merchandise will improve customer selection and bring tax parity amongst the pension merchandise.
Open NPS Tier-II Tax-saver Scheme to salaried
The NPS Tier-II Tax-saver Scheme announced in the Budget 2020 for the Central government workers has a lock-in period of just 3 years and a fixed asset allocation of 10-25% 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 the 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,” says Naveen Kukreja, CEO & Co-founder, Paisabazaar.com.