Budget 2021: 4 Wishlists We The Taxpayers Want From FM
Nirmala Sitharaman, the finance minister, is all prepared to announce her budget today in the Lok Sabha. The budget is anticipated to be revolutionary in its healthcare coverage, employment development, MSMEs and so on. A significant disturbance in economic growth was triggered by the lockdown due to COVID-19, contributing to an unexpected decrease in credit appetite and financial strength of the taxpayers. Although many institutions and NBFCs tend to lend to those with a credit rating of over 750 in general. This prevents exposure to finance for 'new credit' loan borrowers and categories with low-income level. Many financial institutions pursue much stricter pre-defined requirements after COVID-19 before approving fresh loans.
Their credit costs are too strong but microfinance organizations and small finance banks perform a spectacular task in spreading exposure to credit in these inadequate sections. Therefore, in order to expand credit availability and to improve credit demand competitiveness for these sectors, unsecured loans given to fresh credit borrowers must also be incorporated in the banks' preference segment financing range. In order to prevent the banks' credit risk while financing to these inadequate segments, specific guidelines must also be enforced. So coming back to the heading the three top-most tax benefits we the taxpayers want from this Budget 2021 are:
Raise 80C Limit
At least Rs 3 lakh must be raised under the 80C deduction cap of Rs 1.5 lakh. In the period of crisis due to the pandemic, culminated in employment cuts and wage cuts, delivered the significance of having good financial reserves. In Budget 2014-15, the cap of Rs.1.5 lakh was updated for the last time. Raising this cap will allow individuals to save more for their financial wellbeing in the long run.
Individual exemption for term insurance
The epidemic has taught us the threat of our survival and the value of supporting sufficient life insurance that ensures the financial security of our families. Preferably, insurance cover must be equal to at least 10-15 times the annual salary of an individual. Many individuals, though, correlate insurance with savings and end up purchasing life insurance plans that have insufficient coverage. Purchasing term insurance plans is the most cost-effective method of purchasing big life covers at low premiums. Regardless of the Section 80C cap, a special section for term insurance plans will incentivize individuals to purchase term insurance policies to obtain sufficient life protection to secure the future of their children.
Individual exemption for home loans
Actively, under Section 80C, the capital reimbursed on home loans is qualified for deduction whereas, under Section 24b, the interest amount of up to Rs 2 lakh is qualified for tax benefit That being said, since section 80C now being a cramped environment, the full tax gain for their home loan principal repayments can not be used by many householders. For a huge segment of property investors, even the Rs 2 lakh cap under Section 24b seems insufficient, particularly in their early years of the term of home loan. Therefore, with a total overall tax benefit cap of at least Rs 5 lakh for principal and interest paid, there should be a special section for home loans. This will raise the appetite of buyers and improve consumption in the housing market, which can serve a significant role in revitalizing ultimate economic growth.
Raise deduction limit under section 80EEA
Under Section 80EEA, Budget 2019 proposed an additional benefit of up to Rs 1.5 lakh for interest paid on loans by fresh home buyers to purchase reasonable homes. In addition to the Rs 2 lakh tax benefit applicable under Section 24b, this exemption is valid. Although this exemption was extended in the 2020 budget, it is only available to FY19-20-sanctioned home loans. Therefore, to improve home sales in the subsidized housing market this clause should be expanded to the next fiscal year. Currently, only homes with a worth of less than Rs 45 lakh are entitled to gain from an additional exemption. This cap should be expanded to Rs 75 lakh in order to correlate with the value of properties on the market, particularly in the metropolitan areas.