Budget 2021: Taxpayers have expectations from Finance Minister, will tax increase?

On February 1, Finance Minister Nirmala Sitharaman will current the price range. Taxpayers have many expectations from this price range. This price range turns into much more necessary on account of adversarial results on employment and earnings of individuals on account of corona virus epidemic. Currently the deduction accessible below Sections 80C, 80CCC and 80 CCD (1) is capped at 1.50 lakhs per yr as per Section 80CCE. This restrict of 1.50 lakhs was revised to 1 lakhs in 2014. The restrict of 1 lakh was set in 2003. It has been nearly 18 years for the reason that authentic restrict of 1 lakh was mounted. In 2014 it has been elevated by solely 50% which is lower than 3% yearly. This annual common progress can also be not equal to the common inflation throughout the identical interval. This ought to be lowered to a minimal of two.50 lakhs straight.

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Tax provision on NPS withdrawal

Current tax regulation solely permits withdrawals as much as 60% on the time of account closure. For the steadiness quantity, the NPS buyer is required to buy an annuity. It is price noting right here that the annuity turns into taxable as quickly as it’s acquired. Simply put, successfully solely 60% of the corpus is tax-free and the steadiness turns into taxable in future. Unlike NPS withdrawals, the amassed steadiness within the Employees Provident Fund (EPF) is totally tax-free on time or retirement.

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If the federal government can’t make EPF taxable by exempting it to the extent of 40% of the amassed funds like NPS, which the federal government tried a number of years in the past, then the federal government ought to be capable to carry parity a minimum of differently. Should attempt. The authorities ought to get rid of the necessity to buy an annuity with a 40% corpus and depart a choice with the client as to the place he desires to speculate the cash.

Budget 2021: GST demand for auto sector ought to be lowered, give incentive to digital automotive trade

Rationalization of curiosity deduction for self-occupied property

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Tax legal guidelines provide the good thing about curiosity on the quantity borrowed for the acquisition, building, renovation of any home property. However the quantity of such declare is restricted to 2 lakh within the whole case of two self-occupied homes. In the next 8 years the steadiness has been allowed to be carried ahead with out loss to keep up a steadiness in opposition to losses below the top home property. Arguably tax advantages ought to be made accessible to actual residence consumers for full curiosity. Own residence and never for individuals who use it as funding and do tax arbitration.

(The writer is a tax and funding knowledgeable. The views expressed by the writer are private.)

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