As the Union Budget 2021 nears, Finance Minister Nirmala Sitharaman has the challenging task of boosting spending as the Indian economy slowly recovers from the impact of the Covid-19 pandemic and ensuing lockdowns.
Even as the FM has promised a budget unlike anything seen before, citizens are hoping to see some relaxations in the income tax, among other reliefs.
The government may be contemplating tax exemptions to promote savings, healthcare and housing, according to a report. A common expectation from the government this year is to revisit the personal slabs, increase in the standard deduction and a special deduction for Covid treatment.
However, reports suggest that in Budget 2021-22, any changes in personal tax rates seems unlikely, dampening the expectations of citizens. Experts believe that income tax slabs may continue as they were last year and there is limited scope for increasing deduction under 80C due to a fall in government revenues.
In the Union Budget 2020, the FM introduced a new income tax regime with reduced tax rates for those who willing to relinquish 70 tax exemptions and deductions. This is optional and the old system will coexist with the new.
This is what the income tax slabs are like as per Budget 2020:
| Total Income (Rs) | Income tax rate |
| Up to Rs 2.5 lakh | Nil |
| Rs 2.5-5 lakh | 5 per cent |
| Rs. 5-7.5 lakh | 10 per cent |
| Rs 7.5-10 lakh | 15 per cent |
| Rs 10-12.5 lakh | 20 per cent |
| Rs 12.5-15 lakh | 25 per cent |
| Rs 15 lakh and above | 30 per cent |