Finance Minister Nirmala Sitharaman on Monday presented the Union Budget 2021-22. While Sitharaman announced relief measures to revive the pandemic-hit economy, she didn't propose any change in the existing Income Tax slabs and exemptions under 80C and 80D.
The salaried class wanted Sitharaman to revise the Income Tax slabs that have been left unchanged for years. Besides higher basic exemption limits, people also expected a hike in the exemption limits under Section 80C and 80D.
What is new income tax slab for 2021-22?
In the last few years, the Modi government has so far pushed for a rebate on all payable taxes but didn't change the slabs. In the previous Budget, Sitharaman had offered an optional lower rate of income tax to individuals as she introduced new tax slabs of 15 per cent and 25 per cent in addition to the existing 10 per cent, 20 per cent and 30 per cent. The new I-T slabs, which came into effect on April 1, 2020, are for individuals not availing of certain specified deductions or exemptions.
What is the 80C limit for 2020-21?
Under the Section 80C, an individual can claim a deduction of Rs 1.5 lakh. In other words, an individual can reduce up to Rs 1,50,000 from his/her total taxable income.
Experts and professional bodies like ICAI have also recommended the government to increase the deduction limit under Section 80C of the Income Tax Act. Some have suggested the government to allow higher deduction under Section 80C, 80D and increase the deposit limit in PPF to Rs 3 lakh.
Which deductions are still allowed for 2021?
The government offers a number of deductions under various Sections of the Income Tax Act for individuals to bring down taxable income. The most popular ones are Section 80C (deductions on investments), Section 80CCC (insurance premium), Section 80CCD (pension contribution), Section 80 TTA (interest on savings account), Section 80GG (house rent paid), Section 80E (interest on education loan), Section 80EE (interest on home loan), Section 80CCG (Rajiv Gandhi Equity Saving Scheme - RGESS), Section 80D (medical insurance), Section 80DD (disabled dependent), Section 80DDB (medical expenditure), Section 80U (physical disability), Section 80G (donations), Section 80GGB (company contribution), Section 80GGC (contribution to political parties), Section 80RRB (royalty of a patent), Section 80 TTB (deduction of interest on deposits for senior citizens).
Meanwhile, for the first time ever, the Budget will be paperless this year due to COVID. It will be available for all as a soft copy, online