Budget 2021: Union Budget for the fiscal year 2021-22 will be announced today and hopes are high for the coronavirus-hit economy as Finance Minister Nirmala Sitharaman makes her third offering today (1 February 2021). The ninth budget under the Modi government is expected to provide relief to the middle class and increase spending on job creation, as well as easing rules to attract more foreign investments. Notably, the government is likely to keep the income tax returns slabs intact this year.
The income tax slab is the most important aspect for a common man who expects to get relief in. With the Finance Minister’s big statement that the Budget 2021 would be like never before, it has only made people hope for the much-required relaxation in the tax bracket, especially after the hardships faced amid the COVID-19 pandemic.
For the coronavirus-hit country, Sitharaman had introduced various income tax slabs and tax rates for individuals under seven different sections in the Budget 2020.
The current tax system, revised in 2020, exempted individuals with the annual income up to Rs 2.5 lakh will be exempt from tax. The next slab is for individuals earning between Rs 2.5 lakh and Rs 5 lakh; they have to pay 5 per cent tax. Next, individuals who earn between Rs 5 and Rs 7.5 lakh are being taxed at 10 per cent. Similarly, those earning between Rs 7.5 and Rs 10 lakh are taxed at 15 per cent rate.
For individuals earning between Rs 10 and Rs 12.5 lakh, the tax rate is 20 per cent, while for those between Rs 12.5 and Rs 15 lakh income, the rate is 25 per cent. Lastly, individuals earning above Rs 15 lakh are taxed at 30 per cent.
However, taxpayers were stripped of exemptions like home loan, insurance, or standard deductions and given the option to choose what suits them better based on the pros and cons of the regimes.
The story will be updated with more details after the Budget announcement…