Hit hard by the Covid-19 pandemic last year, a common man is still grappling with the woes of the pandemic this year. There were salary cuts, job loses, businesses shut as many tanked to a point of no return. The common man has seen it all in the year 2020.
Hence, when Modi government and Finance Minister Nirmala Sitaraman will present the budget 2021 next month, common man will definitely expect more incentives, subsidies, tax cuts and other benefits from it.
FPJ highlights the key expectations of an individual from the upcoming Budget 2021.
Tax relief for individual u/s 80:
Many are eagerly waiting for the government to increases the exemption limit of standard deduction under section 80C to Rs 2.5 lakh from Rs 1.5 lakh currently.
Under Section 80C, an individual can claim tax deduction benefits on payments made for various policies including insurance policies, fixed deposits, provident funds, tuition fees and construction of purchase of residential properties. However, the limit of deduction available under Section 80C is Rs 1.5 lakh.
“We are expecting the exemption u/s 80C to be increased to about Rs 2.5 lakh to 3 lakh. This will help us reduce our tax burden resulting in more money in the hands of a salaried person,” said Aniket Sharma, a bank executive.
Anirudh Mohale, area head, Fisdom, expressed the same saying, “If the tax deduction u/s 80C is not increased to at least Rs 2.5 lakh the common man will continue to struggle. The taxes are rising and there is bare minimum money left in the hands of an individual.”
Moreover, with coronavirus being added as a new health concern, people have become more health conscious. The medical bills have increased and there is a huge demand for medical insurances.
“Hence to keep pace with the rising medical costs, we want the standard deduction u/s 80D also to be increased from Rs 50,000 to Rs 1,00,000,” Aniket Sharma adds.
The maximum deductions available under sections 80 are as follows: Section 80C to 80CCC is Rs 1,50,000, Section 80CCD Rs 50,000, Section 80D Rs 30,000 for self, spouse and children, Rs 30,000 for parents, and Rs 50,000 for senior citizens.
Many individuals FPJ spoke to also want to include the deduction for life insurance premiums paid in the new tax regime.
“We buy life insurance and pay regular premium towards life insurance policies as this investment comes with tax benefit under the Section 80C. However, in the New Tax Regime, no such benefit is available on the premium paid. Hence the premium paid on life insurance policies if included in the new tax regime will benefit us who have taken many insurances for our family,” said Vikas Bhalla, who runs stationery business.
Tax benefit for home buyers:
The demand for home buyers does not seem to be growing much despite government taking several steps in the past. Hence common man is expecting the upcoming budget 2021 to announce few more steps in boosting the housing demand.
However, for the first-time buyer of a home, the government has extended the tax benefit available on interest payment of the home loan. Under Section 80EEA, the borrower can avail a deduction of up to Rs 1.5 lakh on home loan interest payment subject to certain conditions.
One such condition is that the home loan needs to be sanctioned by the lending institution during the period from 1st April 2019 to 31st March 2020 which has already been extended to March 31, 2021. Plus, to avail tax benefit under Section 80EEA, the value of the home as per the stamp duty needs to be within Rs 45 lakh.
“We find these provisions restrictive as the rising property prices have made home buying difficult for common man,” said Kalpana Pathak, a company executive.
