New Delhi: In order to provide much-needed relief to the salaried class, the Narendra Modi-led government is reportedly planning tax exemptions in the upcoming Budget 2021 to boost savings, healthcare, and affordable housing. Reports claimed that the finance ministry, in the upcoming Budget, may hike the exception limit under Section 80C to Rs 2 lakh from Rs 1.5 lakh. Also Read - PM Modi Discusses Production Linked Incentive Scheme With India Inc | Key Points
Speaking to a Business Today, a source in the Income Tax (I-T) department asserted that changes to the exemption limits in the personal income tax have been discussed. Also Read - Code of Conduct: EC Asks Petrol Pumps to Remove Hoardings With PM Modi's Photos Within 72 Hours
“Tax exemption limit of Rs 1.5 lakh on savings is likely to be reworked. It may go up to Rs 2 lakh”, the portal quoted the source as saying. Also Read - World Wildlife Day 2021: Significance And Theme of This Day
Besides, the deduction limit on health insurance premiums might go beyond Rs 25,000. However, the income tax slabs are expected to remain the same which means that there won’t be any change in personal tax rates.
Currently, the basic exemption limit is Rs 2.5 lakh per annum and income between Rs 2.5-5 lakh is taxed at 5 per cent. Those in the income bracket of Rs 5-10 lakh are taxed at 20 per cent and those above Rs 10 lakh are taxed at 30 per cent rate. There is also a three-layered surcharge for the super rich in the salary brackets of Rs 1 crore, Rs 2 crore and Rs 5 crore.
In the 2019 interim budget, the Centre had proposed a rebate on all payable taxes if an individual’s taxable income is upto Rs 5 lakh per annum. But it kept the basic exemption levels unchanged. Even in budget 2020, the basic exemption limit remained unchanged even though the government provided some relief to taxpayers by allowing them to choose between the existing tax regime and an (optional) alternative new tax regime with lower rates sans exemptions.