Budget 2021: Pandemic-battered salaried class to get some cushion now

NEW DELHI:  What’s in it for me would be the prominent question racking the brains of many when Finance Minister Nirmala Sitharaman presents the Union Budget on Monday.

Be that as it may, the salaried class battered by the pandemic is likely to get some relief this year, with major changes in tax slabs being ruled out and experts hinting at some relief in terms of increased limit of standard deduction.

“The Budget may hike the standard deduction limit to boost consumption. This will give some relief to the salaried class,” a senior official from the Finance Ministry had told TNIE last week.

Introduced in the 2018-19 Budget, the standard deduction replaced the medical and transport allowance up to Rs 50,000. However, industries have been demanding a further hike in standard deduction ever since.

In her last year’s Budget, Finance Minister Nirmala Sitharaman had introduced a new income tax regime under which there is zero tax on income up to Rs 2.5 lakh; income between Rs 2.5 lakh and Rs 5 lakh attract a five per cent levy, which is 10 per cent on income between Rs 5 lakh and Rs 7.5 lakh; income between Rs 7.5 lakh and Rs 10 lakh are charged 15 per cent while the slab is at 20 per cent for income between  Rs 10 lakh and Rs 12.5 lakh; the slab rises to 25 per cent for income between Rs 12.5 lakh and Rs 15 lakh, beyond which the levy is 30 per cent.

These rates were available to people, who were ready to forego some exemptions in the earlier tax slabs. The budget gave the people the option to migrate to the new regime or stay with the older system.

When calculations hinted that the previous regime was more attractive, people opted out of the migration.

However, sources say the Finance Ministry is likely to introduce some more deductions in the new slab to make it more attractive based on the market feedback.