Now there is less than a week to come in the Finance Bill 2021. The Finance Bill will be tabled in the Parliament on 1 February. In such a situation, the expectations of taxpayers have increased once again. Covid-19 had shaken the entire business environment badly during the financial year 2020-21. This resulted in heavy losses to companies. On a large scale, people lost jobs and most of them faced cuts in their salary. For all these reasons, the economy went into a big slowdown.
The middle class and SME sector who do the job hope that some relief will be announced for them this year. Surprisingly, Finance Minister Nirmala Sitharaman has also said in a statement that this year’s budget will be extraordinary. This statement too has given wings to the expectations of taxpayers.
Last year, the government announced relief packages in several installments from time to time to help the economy recover from the bad effects of the Covid-19 epidemic. However, the formal and informal sector will still take a few more months to return to Covid’s earlier levels.
In the post-Covid era, the biggest responsibility before the Finance Minister is to bring back the level of consumption in the economy. This can happen only if the tax benefits provided to taxpayers under certain 80C increase the tax benefits. In addition, tax breaks should be considered on both old and new commercial and residential properties to boost the real estate and construction sector.
The complexity of the tax system has steadily increased over the years. Adhering to the GST has proved to be a zigzag for the entire business sector. The government should work to simplify the system of compliance on this occasion and avoid imposing new conditions and requirements in the existing tax and corporate laws.
Apart from these, the focus of the Finance Minister should be on increasing the amount of capital to be injected into the economy. For this, one should consider giving tax break to new investment especially in SME and MSME sector.
It is also important at this time that taxpayers and especially salaried classes should not be subjected to additional tax burden. Alternate scheme for taxation (with no deduction) was offered last year. This scheme should be amended so that maximum salaried taxpayers can join it as a large section has not included themselves in this scheme.
The government has recently launched the vaccination program of Covid-19 on a large scale and in such a situation it will be special to see whether taxpayers also get any relief vaccine in this budget.