Income Tax Slab 2021-22 LIVE Updates: No Changes in Personal Income Tax, Senior Citizens, NRIs Get Relief

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Some tax experts, however, believe that since a new income tax regime was introduced in the financial year 2020-21, this year’s Budget may not see many new changes. “The fact that a new tax regime has been introduced last year means that not many changes can be expected now,” HDFC Securities said in a note. Religare Broking in a note said: “Given that the government is already running a high deficit owing to lower tax collections, we believe any large cuts would be unlikely. However, some relief to certain distressed sectors and tinkering in personal income tax could be on the cards.”

A report in Mint quoted tax experts as saying that the government may fix some anomalies in the NPS or National Pension Scheme with regard to income tax benefits. “For contribution towards Tier I account up to 14% of the employer’s contribution is permitted for central government employees but when it comes to other employees maximum up to 10% of the contribution from employer is eligible for deduction under Section 80CCD(2),” tax expert Balwant Jain was quoted.

Under the current income tax laws, switching of investment in units within the same scheme of a mutual fund from growth option to dividend option (or vice-versa), and from regular plan to direct plan or (or vice-versa) is considered a “transfer” and is therefore liable to capital gains tax, even though the amount invested remains in the mutual fund scheme. However, the switching of investments to/from investment plans to another within the same Unit Linked Insurance Plan (ULIP) of insurance companies is not considered as a “Transfer” and hence, not subjected to any Capital Gains Tax.

The mutual fund industry in its proposals for Budget 2021 has said that “there is need to have uniformity in the tax treatment for “switch” transaction in respect ULIPs and mutual fund products to have a level playing field”, the report stated.

In a relief to salaried middle-class taxpayers amid the coronavirus pandemic and to boost consumption, the central government may hike the standard deduction limit in Budget 2021, experts were quoted. Standard deduction is a fixed deduction that is allowed to specific income tax assessees, irrespective of expenses incurred or investments made. Introduced in the 2018-19 Budget, the standard deduction replaced the medical and transport allowance. It was further increased to Rs 50,000 in the following Budget.

Standard deduction should be hiked from Rs 50,000 to Rs 1,00,000, Axis Securities said in a note.

Writing for Economic Times, Ritu Shaktawat of Khaitan & Co suggested weighted tax reliefs for research and development. She wrote that in the current financial year, many Indian companies have incurred significant expenses in research and development activities to develop a cure for the novel coronavirus. The pandemic has been an eye-opener with respect to the importance of such research and development activities and how such companies end up being the backbone of the country during these trying times. Therefore, the government should consider weighted deductions for scientific research and development expenditure, especially the research and development expenditure in relation to development of vaccines/cures for diseases.



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