Budget 2021: These are the expectations of ordinary people from the budget regarding income tax, due to Corona, the government has less option

Union Budget 2021-22 Expectations for Direct Taxes: Finance Minister Nirmala Sitharaman will present the budget on 1 February for the financial year 2021-22 amid the Corona epidemic. People have high expectations from this budget, but due to economic slowdown and the lockdown imposed due to Corona across the country, the loss in revenue has left fewer options before the government. According to Divakar Vijayasarathy, founder and managing partner of DVS Advisors LLP, the possibility of tax cuts is very low due to fiscal challenges, but it is likely to impose covid cess (additional tax).

These announcements are possible regarding income tax

According to Vijayasarathy, the government can make many types of announcements regarding income tax. With this, the financial needs of the government can also be fulfilled.

• Increase in tax saving investor limits The central government can increase the maximum limit under tax-saving investments like section 80C, section 80 CCD (1B) etc. With this, the government will also meet the need of the fund at a fixed rate for a long time.
• Deductions on expenses related to COVID: Those struggling on the financial front due to infection with the coronavirus can get relief from the budget. The central government can approve the expenses for a tax deduction on hospitalization due to COVID in the budget.
• New Category of Tax Saving Bonds: To increase its resources, the central government can introduce a new category of tax saving bonds such as COVID bonds in the budget. The government can facilitate tax deduction on these bonds.
• Tax incentives to non-resident investors: In order to attract foreign capital, the government may reduce the Compliance and declare attractive tax incentives for non-resident investments.

Single tax slab can be refunded

Bhuta Shah & Co LLP partner Harsh Bhuta hopes that the Finance Minister can make this change in the tax slab.

• Increase in income tax threshold limit: The Finance Minister may consider bringing a single tax slab again in the budget and declare income below Rs 7.5 lakh tax-free.
• Tax incentives on work from home expenses: Work from home allowances/reimbursements given by the Employers to the Employee may be clearly non-taxable to the Employee and may be approved as a business expense for the Employer.
• LTCG holding period reduction of debt funds: In the budget, debt-oriented growth may consider reducing the holding period for capital gains from mutual funds. In the budget, this can be reduced from 36 months to 12 months.
• LTCG Incentives on Real Estate: The long term capital gains rate on real estate assets should be reduced to 10 percent. At present, this rate is 20 percent. Apart from this, the holding period should be reduced from 24 months to 12 months.