The government in last year's Union Budget announced a new and simplified personal tax regime consisting of revised income tax slabs and tax rates
Finance Minister Nirmala Sitharaman will present the Union Budget for financial year 2021-22 on February 1. The Budget for the upcoming financial year assumes significance as it will shed light on how the government plans to revive the economy which is expected contract at 7.7 per cent for the current financial year. As part of reviving the economy, which was hit hard by the Covid-19 pandemic, government had last year announced a lot schemes like Atmanirbhar Bharat Abhiyan and production linked incentive scheme for manufacturing sector.
In order to fund these schemes government has to incur huge investment and at the same time its revenue collection was severely impacted due to Covid-19 pandemic. In this backdrop research and advisory firm Taxmann expects the government not to announce any new tax deductions in the upcoming Budget.
"Where on one hand the Government has to incur a huge sum to finance these packages, on the other hand, it has suffered a loss of revenue as some industries have been impacted severely by the pandemic. Thus, it is not likely that Govt. may increase the basic threshold limit or announce any new tax deduction in the upcoming budget," Taxmann said in its pre-budget recommendations to the government.
The government in last year's Union Budget announced a new and simplified personal tax regime consisting of revised income tax slabs and tax rates. Under the new tax structure, people earning ₹ 5-7.5 lakh will have to pay just 10 per cent, while those earning up to ₹ 5 lakh annually will pay no tax.