With India slowly recovering from the pandemic, the public is hopeful of buoyancy in the economy and the introduction of a taxpayer-friendly budget. While various economic packages and reforms announced by the government in 2020 had kept the economy afloat, Budget 2021 is also being looked upon as a watershed event that is expected to lift and give an impetus to the Indian economy.
Some of the expectations of the common man from the Budget 2021 are as follows:
1.Deduction For Remote Working Set-up
With the onset of the Covid-19 Pandemic, the working class people witnessed a paradigm shift in the work culture. Work From Home was implemented by companies around the world and soon became the norm.
Thus public expects that Budget 2021 should introduce measures that would provide certain tax benefits for employees. For example, an additional standard deduction of Rs 50,000 from gross income could be provided to allow for expenditure by employees who are working from home on chairs/furniture, computer equipment, data cards, etc.
2. Increase in limit Under Section 80C and 80D of Income Tax Act
Increasing the cap on such tax-saving instruments will lead to larger disposable incomes and increased sentiment towards investment, which experts say is crucial for economic revival. Under Section D, the deduction for mediclaim coverage for non-senior citizens should be increased from Rs 25,000 to Rs 50,000 and for senior citizens from Rs 50,000 to Rs 75,000 to help the taxpayer tide over any emergency health crisis like COvid-19.
3. Increase in Spending Power of the Consumer
From the taxation point of view, experts say the budget must bring in some tax reforms as well as relief to increase the spending power of the consumer. A report by Financial Express denotes that a better tax infrastructure that is more simplified and incentivized should be introduced in the budget. Also providing tax holidays or tax relief to startups and MSMEs will encourage them to hire and retain talent which will further lead to an increase in employment.
Also read: Budget 2021: Know All About the Existing Income Tax Slabs
Long-term capital gains from the sale of listed equity shares and equity mutual funds are tax-exempt up to Rs 1 lakh. Further, the gain above Rs 1 lakh is subjected to tax at 10% (plus applicable surcharge and cess) without the benefit of indexation. The government should look at increasing the exemption limit from Rs 1 lakh to Rs 2 lakhs for retail investors. In addition, a reduction in the tax rate by 5 percent may give a boost to the capital markets.
5. Introduction to Debt Linked Savings Scheme
Industry experts believe the introduction of DLSS (Debt Linked Savings Scheme) will help channelize long-term savings of retail investors into higher credit rated debt instruments with appropriate tax benefits which will help in deepening the Indian Bond Market while also help investors to park their monies in a proposed shorter lock-in product (5years) v/s a PPF (15years) or NPS(till retirement).
6. Pension Scheme For the Elderly
Finally, a large population of senior citizens in India do not have the benefit of a pension scheme. Industry experts say, by introducing a universal pension program with senior-friendly tax structures, the Government has the opportunity to give financial freedom to that segment of the population.
The people of India are hopeful that if some of these suggestions are taken into account in the Budget 2021, it is likely to benefit them at large and also usher in a better economic structure for the upcoming year.
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