COVID-19 pandemic hit the salaried class severely. Around 20 million organised sector employees withdrew more than Rs 73,000 crore from the Employees Provident Fund Organization (EPFO) till December 31, 2020, as livelihoods took a hit, according to the labour ministry. Millions of people lost their jobs or received hefty pay cuts during the outbreak.
Now, as the PM Modi-led government is all set to present its eighth union budget, the salaried middle-class taxpayers are expecting some relief from the Finance Minister.
Some of the experts have clearly stated that the government is unlikely to make any changes in the income tax slab, but some others have anticipated a relief under Section 80C and 80D.
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DK Mishra, a tax expert told ANI, "Salaried class and middle class have great expectations regarding some tax relaxation. What I saw for the industry sector, the government has already given sufficient stimulus packages from time to time, to give the booster to the industry. The expectation is that the government should increase the 80C limit from Rs 1.5 lakh to somewhere around Rs 2.5 to 3 lakhs".
Currently, an individual taxpayer is eligible to claim deductions of up to Rs 1.5 lakh on various payments including life insurance premiums, fixed deposits, provident funds, etc under Section 80C. Considering the pandemic and its impact on the taxpayers, the government may increase this upper limit which will encourage people to spend more on tax-saving instruments backed by the government.
Mishra said there is also a demand to increase the limit of health insurance premium under section 80D, which is currently at Rs 25,000. The coronavirus pandemic has shown that a health insurance product is a necessity, not an option anymore. Therefore, the government may increase the upper limit on health insurance premiums under Section 80D.
As per the provisions of section 80D, an individual can claim an exemption of up to Rs 25,000 towards health insurance of spouse, self, and children if the eldest member is below the age of 60. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 if your parents are aged above 60. Now, since the outbreak of coronavirus, more people saw health insurance as a need, therefore the people could expect the government to increase the deduction threshold for medical insurance.
Further, because of the pandemic, the remote working facility has become the 'new normal' and therefore, the salaried individuals have to incur additional expenses due to remote working, for example, furniture expenses, Wi-Fi, electricity, and various other expenses. So, the government could look at providing deductions for such expenses incurred by salaried employees in the upcoming Budget.