New Delhi: The Narendra Modi-led government is reportedly considering tax relief for the middle class in the upcoming Union Budget 2020-21, which is likely to be presented on February 1 by Union Finance Minister Nirmala Sitharaman. Government officials and FM Sitharaman held series of pre-Budget consultations with leaders of various industries and other stakeholder groups to curb the ongoing economic slowdown. Also Read - Be Ready to Counter Controversies: Ministry Officials Told Ahead of Budget Session
Speaking to a leading daily, an official asserted that the Finance Ministry is taking number of suggestions and is mulling to reward the middle class by cutting down their tax burden. “One view is to remove all surcharges on middle class and to keep the income tax structure simple. Some tax relief is being thought of, either in the form of an adjustment of tax slabs or the removal of the surcharges,” an official told The Indian Express.
In the interim Budget in February 2019, there was some relief given to taxpayers but it primarily benefited only those whose income was below Rs 5 lakh. It was announced that there will be no tax liability if the net taxable income does not exceed Rs 5 lakh. Another relief for the salaried class was the hike in standard deduction by Rs 10,000 to Rs 50,000 per year. The standard deduction of Rs 40,000 was introduced in Budget 2018 in lieu of medical reimbursement and conveyance allowance.
Meanwhile, the government is also planning to benefit new home buyers this year. If reports are to be believed, the Finance Minister might increase tax incentives for new home purchase. The official informed the IE that discussions on the matter are currently underway as real estate is considered as a key sector and has one of the biggest effects on the economy
To meet Prime Minister Modi’s commitment of ‘Housing For All by 2022’, the Finance Ministry may income tax incentives for rental housing. In its pre-Budget 2020 memorandum ASSOCHAM had suggested that ‘Rental Housing’ needs a boost as various people in India cannot afford ownership housing. The apex trade associations of India has reportedly said that a flat 10 per cent should be levied on rental income of house properties in the upcoming Budget.