Finance Minister Nirmala Sitharaman will present her 5th Union Budget today. Due to no change in the minimum limit of tax exemption for the last several years, the expectations of salaried taxpayers have increased in this budget.
One of the main reasons for this is that the Lok Sabha elections are to be held next year, in view of which the central government can make populist announcements. The Union Finance Minister will present the budget from 11 am on Wednesday.
It is noteworthy that since 2014, there has been no change in any slab regarding income tax exemption. That’s why it is expected that the government can end the drought of 9 years this time. However, in the 2020 budget, Finance Minister Nirmala Sitharaman had announced to implement a new alternative tax system.
Income tax rates likely to be simplified
In Budget 2020, Finance Minister Nirmala Sitharaman announced a new alternative tax regime with higher tax slabs and lower tax rates. But the tax payers did not get much relief from the new tax system. Therefore, the demand for reducing the tax rate applicable to individual taxpayers still remains, as there is a huge difference between the corporate and personal tax rates.
Increase in Basic Exemption For individuals up to the age of 60 years, income up to Rs 2.5 lakh is tax free. For taxpayers in the age group of 60-80 years and for those above 80, the exemption limit is Rs 3 lakh and Rs 5 lakh respectively. Many tax experts believe that it needs to be increased.
According to Archit , founder and CEO of tax and investment platform Clear, it has been almost a decade since the exemption limit was amended. Archit Gupta believes that taxpayers are expecting relief in the form of either an increase in the basic exemption limit from Rs 2.5 lakh to Rs 5 lakh or a reduction in tax rates. He said that taxpayers also expect that deduction under section 80C and 80D will be increased.
