The upcoming Budget announcement is expected to implement an income tax relief of Rs.50,000 – Rs.80,000 in the total tax liability. The discussions during the Budget 2021 exercise has given the clue of such a relief coming.
It is expected that the government may also increase the standard deduction under the old tax regime. Currently, the standard deduction applicable is Rs.50,000. It is said that the government may want to give more money at hand for taxpayers, and hence, there is a possibility of increasing the limit further in the upcoming budget.
The deduction was re-introduced in the Budget 2018 in lieu of Rs.15,000 for medical reimbursement and Rs.19,200 for transport allowance at Rs.40,000.
Further, the government may increase the tax relief on housing loans to boost the housing sector that has suffered losses due to the pandemic.
On the other hand, we may expect a change in the tax slabs under the new tax regime. As you know, the new tax regime was introduced in Budget 2020. The new tax regime included lower tax rates as compared to the old tax regime. However, the catch here is that the taxpayers had to forego claiming the regular income tax exemptions and deductions they could claim thus far.
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Generally, it is seen that the new tax regime did not receive much excitement from the taxpayers. Many taxpayers believe that the new tax regime doesn’t stand out as the better option among the two regimes.
To make the new regime more popular among taxpayers, some changes can be expected from the government’s end. When slabs are changed in the new regime, taxpayers may find some space for tax-saving and may opt for it.
The old and new tax regimes apply to individual taxpayers up to the age of 60.
For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in
