The Union Budget 2021 is almost here. Finance Minister Smt. Smt. Nirmala Sitharaman has promised a never before like Paperless Union Budget as the Modi Government looks to give a further boost to the Indian economy. In this article, we will be discussing some of the Direct Tax and GST Expectations that the taxpayers have from the Union Budget 2021.
Income Tax Expectations
As Income Tax is one of the most important aspects of the Budget, some relief for the common man is what we look forward to.
Income Tax Slab Rates
The Government is expected to review the Income Tax slabs for individuals in a way that allows them to increase their spending as well as their investments. Additionally, the MSME/Start-up sectors should be given incentives and rebates that help them grow, together with the facility of ease of doing business
At present, deductions under Sections 80C, 80CCC and 80CCD(1) are capped together at Rs.1.5 lakh per annum in total. The last time this deduction limit was revised was 2014, where it was raised from Rs.1 lakh per annum. Hence, this year would be the best time to revise this limit to at least Rs.2 lakh per annum and provide taxpayers with some respite. Also, tax benefit should be given on the interest component of the home loan paid on under-construction properties
In order to collect revenue, it is expected that the government may increase the health and education cess from the existing 4% or introduce a new COVID-19 cess to combat COVID-19 and its fall-out. The cess may be introduced for taxpayers in the highest tax bracket.
Work from Home Relief
Work from home has become a new normal for everyone today. The government may give some relief to taxpayers to compensate for the higher cost that they have incurred while working from home.
The standard deduction for salaried employees was introduced in Budget 2018 and was capped at Rs.40,000. Since then, it has only seen an increase of Rs.10,000 in the last three years. It is expected to increase this limit to a modest Rs.75,000 per annum which will benefit millions of salaried employees, especially in this difficult year.
Relaxation on Different Items
The Government should consider a relaxation on import duty and also review GST on non-luxury products like projectors which are under 28% GST slab. Also, there should be a reduction in the GST rates on readymade garments to 5% from 12%, which has been a long-pending expectation in our industry.
GST on Ayurvedic Products
We hope the government will reduce GST on supplements to a maximum of 6% and GST on Ayurvedic products should be made NIL as our country needs a lot of support to develop Ayurveda and alternative medicine systems.
Simplification of GST Returns
It is expected that the GST returns be simplified for the smaller industries whose turnover is less than 5cr. It could be a maximum of 3 to 4 returns in a year.
Health Insurance Premiums
Cutting the GST rate from 18% to 5% on health insurance premiums will be a huge relief, especially for senior citizens who are struggling to meet the rising healthcare costs. At present, on most insurance products, the GST is 18%. A sizable reduction in the GST on all personal lines of products, from the existing 18% to 5% will encourage more people to buy health insurance.
These are some of the Direct Tax and GST expectations that the taxpayers have from the Union Budget 2021. What are your expectations from the Budget 2021? Let us know in the comments section below!
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