Budget 2021 Income Tax Expectations: Experts and men and women are hoping that Finance Minister Nirmala Sitharaman will raise the Income Tax deduction limit below Section 80C of the Income Tax Act up to Rs 3 lakh in the upcoming Budget.
Currently, below Section 80C, a deduction up to Rs 1.5 lakh can be claimed for investments created in different instruments like PPF, 5-year bank FDs, Provident Funds, Life Insurance premium paid and so on.
“It is expected from upcoming budget 2021 that there should be an increase in the deduction limit of section 80C from Rs 1,50,000 to 3,00,000 p.a,” Ankit Sehra, Founder and Tax Expert, Ankit Sehra & Associates.
“This will boost more investment and eventually lead to the overall development of the country,” he added.
Sehra is hoping that this time the Government would be adopting a clear distinction amongst Long term and Short-term savings. He stated that at present there is no big assistance in the tax policy to encourage extended term savings, which is a need to have of this pandemic cycle.
ALSO Study | Budget 2021: Rs 3 lakh Public Provident Fund deposit limit recommended – How will it assist? ICAI explains
“Life insurance and Pension funds are a major source of savings for long term purposes. This time we can expect that the Government would consider the separate exemption limit for both of them apart from section 80C,” he stated.
In its Budget 2021 preview, Yes Securities is expecting a hike in Section 80C limit to Rs 2.5 lakh.
” Govt has currently unleashed slew of measures to prop the provide side of the equation. On demand side, it is crucial to augment disposable incomes of households, which will recalibrate the financial equilibrium,” Yes Securities stated. It is also expecting favourable policies to enhance the true estate demand, which includes an enhance in the exemption for principal repayment on household loans. Yes Securities count on that exemption for principal repayment on household loans must match the HRA limits for salaried class.
Personal tax relief anticipated
Individual taxpayers are hoping for individual tax relief in the spending budget. In a survey by FICCI and Dhruva Advisors, practically 40 per cent of the participants felt that ‘personal tax relief’ must be the crucial theme of direct tax proposals in this year’s spending budget.
Further, practically 47% of the respondents stated that their most significant demand from the Government in respect of direct tax is ‘widening of the tax slabs’.
The Union Budget is applied as an occasion by the Government to introduce measures for simplifying the taxation technique and generating compliance simpler. The survey participants have been asked to highlight their present discomfort points from the taxation viewpoint and how the Government could assistance them. Results show that ‘timely receipt of refunds’ was a crucial challenge faced by as numerous as 52 per cent of the respondents. This was closely followed by ‘tax compliances’ and ‘tax litigation’ with 49% and 43% of the respondents respectively reporting the similar.