New Delhi | Jagran Business Desk: In an attempt to incentivise the optional personal income tax regime introduced in the last Budget, the government is likely to tweak the list of eligible rebates and exemptions to allow some more categories of financial savings instruments for taxpayers.
According to a report by The Indian Express, the new income tax regime, which has three slabs, will have a longer list of exemptions in the government’s bid to reduce the tax burden to push more demand by ensuring more disposable income.
The finance minister may introduce tax proposals to incentivise the new tax regime rather than announcing any major changes in the tax slabs introduced last year.
The report quoted a government official saying that the new tax regime did not work the way it was expected and this is why there was a consideration to "include more exemptions like provident fund" in the new tax regime.
According to the report, several presentations were made ahead of the Budget in which demands have been made to extend the leave travel concession cash voucher scheme, extension of tax benefits for medical expenditure to all taxpayers, a hike in interest rate limits for home loans, and tax concessions for first-time homebuyers in the old tax regime.
Reports have also suggested that in Union Budget 2021-22, the government may give relief of Rs 50,000 to Rs 80,000 in the total tax liability to the taxpayers. The government may increase standard deduction under the old income tax regime and change slabs under the new tax regime.
In the new tax regime introduced last year, Sitharaman had announced three new tax slabs which included lower tax rates, but did away with various deductions and exemptions including those currently available on EPF contribution, tuition fee payment, principal and interest outgo on home loans, standard deduction of Rs 50,000, and medical insurance premium, among others.
Posted By: Abhinav Gupta