Union Budget 2020: Taxpayers are expecting a slew of measures from Finance Minister Nirmala Sitharaman to revive the economy in the Budget 2020 that she would be presenting today. In a list of what middle class taxpayers want from the budget this year, a change in the tax slabs features pretty high. However, the Income Tax Act also allows a series of deductions for the taxpayers.
Under Section 80C of the act, individuals can claim tax deduction benefits on payments made for various policies including insurance policies, fixed deposits, provident funds, tuition fees and construction of purchase of residential properties. However, the limit of deduction available under Section 80C is Rs 1.5 lakh. Taxpayers expect FM Sitharaman to increase the limit to Rs 2.5 lakh. Due to a large number of policies eligible for deduction under Section 80C, the amount of Rs 1.5 lakh is easily exhausted.
Individuals can claim deductions under multiple investment avenues including life insurance policies for self, spouse or children, provident fund, tuition fees for maximum two children, purchase or construction of residential property, fixed deposits of at least 5 years tenure, mutual funds, senior citizen saving schemes, purchase of NABARD bonds etc.
FULL COVERAGE:Union Budget 2020
This Budget, the government could be looking to put more money in the hands of the middle class to fuel consumption. And, an increase in the investment limit under Section 80C would be in line with the government's target.
The taxpayers are also looking for a rearrangement of the tax slabs. According to reports, government might impose a flat rate of 10 per cent for taxpayers earning from Rs 2.5 lakh to Rs 10 lakh. Individuals earning between Rs 10-20 lakh and from Rs 20 lakh to 2 crore might be charged with 20 per cent and 30 per cent tax rates.
In the run-up to the Budget 2020, the Finance Minister and Prime Minister Narendra Modi held several meetings with stakeholders to discuss ways to revive the economy and increase consumption.