Budget 2021: Will you get any major income tax relief?

11 Jan 2021

As the government gets ready to announce its annual expenditure plan for 2021-22, taxpayers in the country are wondering whether they will get tax benefits as part of the Centre's plan to revive growth and demand.

While several industry bodies have sent recommendations for providing relief to taxpayers, only minor changes can be expected in the upcoming budget as the pandemic sharply drained government finances in 2020.

It may be noted that the Centre’s expenditure targets in the ongoing financial year have already been breached due to the additional spending during the pandemic. The government’s fiscal deficit for 2020-21 is likely to be double of the 3.5 per cent of GDP it predicted in February 2020.

Likely income tax changes

Any major relief with regards to income tax is unlikely this year, but some changes like tax deduction towards increased health expenses in the wake of Covid-19 can be expected.

For instance, experts predict the government to increase tax benefits under Section 80D of the Income Tax Act. There could be tax provisions made for specific Covid-19-related expenses, according to experts. However, no government official has hinted at such a possibility as of now.

Simply put, taxpayers in the country are unlikely to see any major changes in standard deduction limit or tax brackets under the old regime as the government had introduced a major income tax change last year.