Tax relief: Standard deduction likely to go up from Rs 50,000 to Rs 1 lakh, it will benefit jobs
- Standard deductions likely to increase due to work-from-home costs
- The exemption limit under tax evading investments may be increased
The standard deduction is likely to increase in the budget to be presented on February 1. It is likely to be increased from Rs 50,000 to Rs 1 lakh. Apart from this, the exemption under tax saving investments may also increase.
Standard deductions are expected to increase due to work-from-home costs
Industry union FICCI has expressed hope that the standard deduction for job seekers will be increased from Rs 50,000 to Rs 1 lakh due to rising costs and inflation associated with work from home. The Ministry of Finance had given the benefit of standard deduction to the people in the 2018 budget. A standard deduction is an amount that is paid directly after income. Tax is calculated on the remaining amount only.
Exemption can be found in the new tax system on donations
In the last budget, Finance Minister Nirmala Sitharaman announced a new structure for income tax. However, there is no provision for exemption other than NPS. Donors can get the benefit of deduction in the next budget.
Under Section 80G of the Income Tax Act, any person, United Hindu Family (HUF) or company, can avail tax exemption on donations made to any fund or charitable organization. The condition is that the organization to which you make this donation must be registered with the government. Donations can be made by check, draft or cash. However, donations above Rs 2,000 in cash will not get the benefit of tax deduction.
The limit on tax saving investments may be increased
The government may increase the tax exemption limit for other tax saving investments, including section 80C. At present there is a provision of exemption of up to Rs 1.5 lakh under Section 80C and up to Rs 50,000 under Section 80CCD (1B) for NPS. 80C includes investments like PPF, home loan principal, NSS.
Exemption limit may increase on health insurance premium
The government may increase the tax benefit on health insurance premium under section 80D. Under 80D, there is a tax deduction for paying up to Rs 25,000 in premiums for health insurance for spouses and children. Apart from this, there is a rebate of Rs 25,000 to Rs 50,000 (if the parents are senior citizens) on the payment of insurance premium for the dependent parents. This means that a person can currently get tax exemption only on premiums up to a maximum of Rs 75,000. It can be made one or one and a half lakh rupees.