Budget 2021 - Expectations of the common man
Given that 2020 was a challenging year, aam aadmi ko budget 2021 se kaafi saari expectations hai. After all, the challenges of 2020 are expected to continue in the new year. The work-from-home culture does not look like it is going anywhere anytime soon. Most people are expecting the pandemic to be used as a bahaana to avoid giving employees raises and bonuses. Many companies are still shamelessly paying employees a lower salary than they started the year with, and all this while inflation still stands at 5.1%. Yeh itna bhi kharab nahi hai, compared to inflation in recent years, lekin jab salary aur earnings kam hai, toh paying even 1% extra is also painful.
The common man simply wants taxation rationalisation and a few discounts and allowances here and there in order to make the present financial times a little less trying.
Toh aam aadmi ka wishlist kya hai? Chaliye dekhte hai.
Standard work-from-home payable amount
Employees have taken on the additional hours that are an outcome work-from-home bina koi complaints, in most cases. Zyaada se zyaada employees ke experience hai ki work from home ka matlab hai working 24X7; meetings at odd hours aur work-life balance?.... Bilkul zero. Lekin, what isn’t going down well is the additional expenses for telephone, internet and purchase, upgrade and maintenance of hardware like laptops, web cameras and so on. Yeh employees ke liye thoda zyaada unacceptable lag raha hai. Ab aam aadmi chahte hai ki government ek standard amount introduce karein, jo employee ko apne salary ke saath, har maheena mil jayega.
Relaxation of NRI norms
Air-travel restrictions aur dusre desho mein job cuts ke kaaran, many people have gotten stranded in India itself. They may or may not have been able to return to work and may have exceeded the number of days above which their residential status changes. For example, my neighbour - a sailor in the merchant navy - was stuck on his ship for 4 months extra, kyunki in ko kisi bhi desh se India aane ke liye flight nahi mil raha tha. Woi ship pe, 10 to 15 staff aise atak gaye the. Meanwhile, the NRIs who had to replace them were stranded in the country. None of these individuals had any control over the situation. However, in order to maintain NRI status (and the taxation benefits that come with it), non resident citizens need to be out of the country for a certain number of months, at least under normal circumstances. Due to the pandemic, last year a circular was issued announcing a relaxation in this norm. Aam aadmi chahte hai ki this practice be extended for 2021-2022 as well.
A kinder outlook towards taxation
Salary cuts in many companies, Covid-19 testing and treatment expenses for family members, costs involved in all the preventive measures being taken, forced investments in the infrastructure required to work from home and in the worst cases, job loss or business bankruptcy and investments that may have underperformed due to the economic impact of the pandemic have left taxpayers with little or no savings in the financial year. There is also continued uncertainty with regards to jobs, even while expenses have either increased or stayed the same at best. The common man, as a result, wants a whole layer of tax-related benefits, including increasing the exemption limit for taxpayers upwards from the Rs 250,000 per annum.
Budget 2020 ka naya tax regime mein, kai income slabs ko reduced taxation mil jata hai... lekin reduced taxation ke badle mein, taxpayers ko dusre deductions aur exemptions forgo karna hota hai.
People had the choice of
One - either go with the old tax regime and do not enjoy the reduced taxation but continue to enjoy the prior deductions and exemptions
Two - go with the new tax regime and do not enjoy the deductions and exemptions but instead enjoy reduced taxation. Ussi samey logo ko yeh system zyaada khaas nahi laga. It was not exactly received with much delight when announced. Budget 2021 aane vaala hain isliye yeh dobaara hot topic ban gaya hai. Aam aadmi chahta hai ki new tax regime mein, yeh exemptions aur deductions bhi allowed rehna chahiye.
The common man would also be happy to see a roadmap for reduction of income tax over the next few years.
Reduction of tax on income earned from property
A very talkative chai walla told me recently that he used to have a side-business as a small-time real estate broker - dusre sheher se aane waale logon ko ghar dikha ke, yeh aadmi thoda bahut paisa kamaata tha. He said he had received zero business since the pandemic because people were not coming back to the city. Abhi log kahi se bhi kaam kar sakte kyuki most companies are continuing to have employees work from home. Iska outcome yeh hai ki people who were earlier renting their houses, shops and offices spaces out, no longer have access to that income kyunki rentals nahi mil sakte hai. Maintenance phir bhi chalu hi hai; in many cases maintenance charges zyaada rehte hai, when houses remain empty. House owners want a higher deduction (than the present 30%) for maintenance and overall rationalisation of income earned from their property.
PF withdrawal without penalty
Zyaada tar, agar provident fund is withdrawn, ya the annual investment for five years is missed by the investor before the tenure is completed, investor ko tax liability mil jati hai. Considering reduced income in many cases and job loss too, in several unfortunate cases, the common man wants the tax liability to be withdrawn in case of a need to withdraw their PF early or are unable to pay their PF divided, particularly in case of job loss. One might envision a situation where the relieving letter is submitted for a waiver in paying the installment due this year, for instance.
Extension for LTCG
Investors would like to have an exemption from paying taxes with regards to shares being sold after two or three years, mutual fund earnings as calculated with withdrawing the sum on maturity and so on. At present profits earned on shares sold after one year or mutual funds maturing after one year attract Long Term Capital Gains, abbreviated as LTCG. Investors pay 10 per cent tax plus cess on LTCG. While this is better than the 15% tax on STCG, investors want a complete exemption given that the first three to six months of the pandemic meant severely underperforming market-linked investments for most part.
Tax benefits for bonds
The common man will be happier to help the government beget the capital required for government aid and economic packages that will be needed to aid economic recovery from the pandemic, if the government makes investing a little more attractive. Obvious toh hai - agar Rahul ne Rohit ko loan diya toh jab Rohit paise lauta raha hai, it would not be correct for him to eye a portion of the interest sum right?
Tax benefits and exemptions would definitely incentivise the common man to invest in government bonds. Tax-free bonds are thus, another demand from the aam aadmi.
Support with regards to medical expenses
At present koi bhi payments jo preventive health checkups ke liye kiye jate hai, up to Rs 5,000 tak, taxpayer ko tax benefit mil jata hai. Covid-19 ke karan, yeh amounts badh gaye hai. The common man wants this amount to be increased drastically. Covid tests and treatment, institutional quarantine and even preventive measures and post-treatment care are extremely costly. People are spending anything from a couple of thousands for very mild cases, to several lakhs where long-term hospitalisation is involved. In consideration of this, increased deductions with relation to preventive health checkups and additional exemptions and tax benefits linked to health are being sought feverishly.
Relief linked to home loan EMI payments
Many people invested in homes in the past few years with no idea that the pandemic would come along and wreak havoc with their finances and expenses. Aam admi ko iss baat mein sarkar ka sahaytha chahiye - aam aadmi chahta hai ki home loan EMI payments - particularly capital repayment - un ke 80C deductions se separate kiya jaye. In other words, in addition to the Rs 150,000 tax deduction available under 80C for certain types of investments, they want to get an additional tax benefit for repaying the principal amount of their housing loans.
Budget 2021 koi typical, aam budget nahi rehna chahiye. Yeh hai crisis wala situation aur aam aadmi ko yeh gehri situation mein government ki help aur understanding, dono chahiye.
Learn more about the Union Budget, the Budget’s impact on your investments and more learnings about #BudgetKaMatlab - by tuning in to our other podcasts. Goodbye friends, until we meet the next time!