The Union Budget 2021 is set to be announced on 1st Feb 2021 and we thought why not compile a list of expectations that citizens have from it, especially during a time when hit by the pandemic. This time, Finance Minister Nirmala Sitharaman has promised India a Union Budget like never before, which has added to the anticipation and excitement of the citizens. Let’s understand what individuals and businesses are expecting, hoping, and wishing from the Budget 2021.
This article covers:
Investments ≠ savings
Experts are hoping for an increase in the tax deduction limit available under Section 80C of the Income Tax Act up to Rs 3 lakh, whereas the limit is up to Rs 1.5 lakh currently. Section 80C deals with several investments and expenses such as Public Provident Fund, Life Insurance premium, and so on. This would encourage taxpayers to invest more.
A house is a security
Taxpayers are expecting the government to increase the tax deduction limits for the repayment of principal and payment of interest on a home loan under Section 80C and Section 24b, respectively. The expectation is: the HRA limit for salaried taxpayers should match the tax exemption limit on the repayment of principal of a home loan. This would spur the demand for affordable housing and the real estate sector as a whole.
Sacred truth: health is wealth
Experts are also expecting a higher tax deduction limit under Section 80D for health insurance premium paid. This would aid deeper penetration of health insurance in the country and make individuals and households better-equipped to meet increasing healthcare expenses. This is to enhance the affordability of quality healthcare. Also, a special focus on enabling easier access to healthcare financing.
Long and short term: about time
Savings can be both short-term and long-term. Experts are hoping that the Budget 2021 makes a clear distinction between both so as to encourage individuals to save for the long term. Since the current income tax policy doesn’t have a provision for long term investments such as life insurance and pension funds, experts are hoping that the government introduces separate exemption limits for both the products in addition to Section 80C.
Much-needed MSME bonanza
MSMEs have been among the most impacted sector by the COVID-19. Ergo, the sector has high hopes from the upcoming Budget for its revival. First, they expect a hike in the limit of collateral-free loans available under the Credit Guarantee Fund for MSMEs. Next, they are wishing for a tax holiday of 1-2 yrs, which would help them revive.
Adjusting GST rates
A temporary reduction in GST rates is expected to boost the COVID-impacted sectors including hospitality, and tours and travel. Not only this, taxpayers are also hoping for a relaxation regarding the payment of GST on a receipt basis, which would ensure better cash flows. Further, taxpayers are also hoping for the inclusion of health insurance in the 5% GST tax slab to enhance the affordability of quality healthcare.
Matching expenses and benefits
Working from home has forced employees to meet several expenses from their own pocket thus decreasing their disposable income. Whereas, when working from office, such expenses were met by the employer. Ergo, experts opine that tax deductions for such expenses incurred by salaried employees should be introduced. This would add to employees’ disposable income and help spur demand in the economy.
Encouraging alternate medicine
Ancient medicine system Ayurveda hopes to get special treatment in this year’s Budget. The Ayurveda sector is wishing for a separate budget that would aid research and promotion of new drug discovery and the process that follows: procure material, manufacture, and market the Ayurvedic medicine.
Since COVID-19 has strained public finances, experts are anticipating the government to levy cess or surcharge on high-income individuals to make up for the harm done. In addition to the above, individual taxpayers are hoping for a widening of income tax slabs, a personal tax relief, and timely receipt of refunds of income tax paid.