However, experts believe the salaried or middle class may get some relief under Section 80C and 80D.
A source in Income Tax Department told ANI that stories are being published daily on various news platforms regarding the budget. However, they are far away from the truth.
Sources said some people are making their own assumptions and they suggested not to jump to conclusion. Suggestions are being discussed at top level and no one knows what is being decided, they added.
Tax experts speaking to ANI also agreed that there will not be any major Income Tax relief in this budget.
“Salaried class and middle class have great expectations regarding some tax relaxation. What I saw for the industry sector, government has already given sufficient stimulus packages time to time to give the booster to the industry. Expectation is that government should increase the 80C limit from Rs 1.5 lakh to somewhere around rs 2.5 to 3 lakhs,” DK Mishra, a tax expert told ANI.
Mishra said there is also a demand to increase the limit of health insurance premium under section 80D, which is currently at Rs 25,000.
“As an expert what I see is, that there is little scope for the government because of the fiscal deficit. Government could not achieve the target of the disinvestment. We should remember that the revenue collections are also not as per the target projection. We are far away from disinvestment target of Rs 2.1 lakh crore. It seems that government will not be able to achieve 40 per cent of the disinvestment target in the current year. Looking at all these aspects there may be little relief in the mediclaim insurance or there may be some threshold limit increase or a little relief to the salaried class but I don’t foresee any major tax relief in this budget,” Mishra added.
Neeru Ahuja, Tax Expert and Partner, Deloitte India said slab rates for individuals upto Rs 5 lakh is 5 per cent and then Rs 5-7 lakh is straightaway 20 per cent.
“This is a big gap so there is room for moderation of the tax slab for individuals. Salaried individuals have incurred extra expenses this year because of work from home, lifestyles changes, so there is an expectation that standard deduction should be increased. The 80C limit, which was laid many years backs also need to be increased,” said Ahuja.
According to Ahuja, corporate sector has really appreciated government schemes such as the production-linked incentives.
The government has already reduced corporate tax rates but there is still a need to look at specific types of expenditure for example research and development expenditure needs to be incentivised. Similarly companies have incurred expenses on employees during this pandemic in reimbursing some of the work from home expenses so there should be clarity from the government side.
“This is an extra ordinary year and it calls for extra ordinary situation that needs to be addressed. So I think it would be okay even if the fiscal deficit is breached. Need of the hour is to spur the demand, increase government spending, and look for avenues to increase the revenues as well,” said Ahuja.
Sharad Malhotra, President, Nippon Paint India said as the economy recovers post COVID-19, pent-up demand has pushed up consumption within the country. For Union Budget 2021, measures that will boost demand further and aid consumer sentiment remain the most important aspect for our industry.
“We are also looking forward to the government incentivising consumers through tax breaks and other measures. We are hopeful of enhanced measures that will increase India’s ranking in Ease of Doing Business and meet government’s target to scale up manufacturing to 25 per cent of the GDP,” said Malhotra.
