The common person has been devastated by the events of thelast year.
If the innate inflation, a feature of fiat currency (i.e.not backed by physical gold), was not enough to keep a middle class Indian andhis family running on a treadmill, the shock of the worldwide epidemic COVID-19has ruined and altered the trajectory of their lives, for worse for most ofthem.
The government is expected to honour the struggles of a middleclass person, and use the annual budget to assuage the pain and pave the pathfor a speedier recovery.
Experts opine the following may be expected tomorrow, onFebruary 1, 2021, when the Union Budget is announced.
Exemption in tax limit to be increased by Rs 50,000 tobecome Rs 3 lakh. Tax has always been a bane of the middle class for whom thismandatory expense steals the joy out of living. If this relaxation is providedin this fragile economic environment, that would be a welcome shade in the swelteringheat of turmoil due to the virus.
80C exemption, which is used for claiming rebate on incometax for savings may see an increase in the amount that can be claimed whilefiling income tax returns. It is being talked about this limit may see an increaseof Rs 50,000 to become Rs 2 lakh.
On similar lines, medical expenses rebate while filingincome tax return under section 80D may increase. Here the experts are seeingan increase of 100%, from the current Rs 25,000 to Rs 50,000. And for thesenior citizens among us, it may go up to Rs 75,000.
Similarly, 80CCD (1B), i.e. investment in NPS (NationalPension System) may go up from Rs 50,000 to Rs 1 lakh. The same has beencoupled with 80C by individuals to not only save their capital for the futurebut also claim income tax they have to pay.
We all must understand a critical feature of fiat currencieslike every currency in the world today. The numbers in your bank account orGoogle Pay and the cash in your wallet is nothing but a promise based on thegoing concern of the nation. In other words, there is no backing of physicalgold kept somewhere. In such a scenario, wealth does not materialise byincreasing the currency in circulation. Hyperinflation, as was in Germany inthe War, is the hellish scenario that can result. Thus, to fund the vaccinationof its citizens, India may apply tax for the same.
Work at home become a reality not only for women but menalso as the lockdown restrictions mandated only the essential servicesemployees to go out. However, the same requires a setup and this expense mightbe allowed to be deducted from any earnings an individual may have to showwhile filing his income tax return.
Further, and in a good news for the casualty industry inIndia, death insurance also known by a softer name – term insurance may see encouragement.Many Indians, for any reason, consider an insurance premium a waste of moneyand thus are reluctant to buy insurance.
Further, the government may request people to invest in targetplans in efforts to raise liquidity without having to do further deficitspending.