What to Expect from Budget 2021: Economic Relief and Tax Benefits Amid Pandemic

As the world continues to navigate through the aftermath of the Covid-19 pandemic, the Budget 2021 brought forth some changes aimed to cushion the economic impact and support taxpayers. This article delves into the expectations and benefits for taxpayers under the new financial measures, focusing on tax exemptions and economic relief packages.

The Pandemic's Impact on Taxpayers

The global pandemic and subsequent lockdowns have wreaked havoc on millions of lives, leading to business closures and job losses. As people struggle to make ends meet, the Budget 2021 sought to bring some relief. Despite promises and assurances from the finance minister, skepticism abounds about the effectiveness and execution of these measures.

Government Budget and Fiscal Measures

The finance minister, Nirmala Sitharaman, announced a budget package designed to bolster the economy and provide support to taxpayers. The budget focused on several key areas, such as economic relief, tax exemptions, and digital compliance.

Economic Relief Announcements

While the finance minister raised hopes with announcements of substantial financial injections, reality often falls short of expectations. The original plan was to allocate a sum of Rupees 2,000,000,000,000 as a booster package to support various sectors of the economy. However, reports show that the Rs 27.5 lakh crore or approximately Rupees 2,750,000,000,000 already spent appears questionable, with many details remaining undisclosed.

Reforms in Tax Filing and Compliance

The Budget 2021 introduced several reforms to simplify the tax process and reduce the compliance burden on taxpayers, especially small and medium enterprises (SMEs).

Income Tax Return (ITR) Exemptions for Senior Citizens

A significant change was the tweaking of tax exemptions for senior citizens. Now,
Very Senior Citizens (aged 75 or more) are exempt from filing ITRs if their income sources include either pension or interest, and they receive both from the same bank account. This measure was designed to provide relief to those who have already faced significant economic challenges due to the pandemic.

Increase in Tax Audit Limit

The limit for conducting Tax Audit was raised from Rs 5 crores to Rs 10 crores. However, over 95% of transactions should be carried out through a digital mode. This adjustment aims to streamline the audit process and reduce the administrative overhead for businesses.

Implications for Middle-Class Taxpayers

Given the persistence of economic hardships, the question remains: are these measures truly sufficient to alleviate the tax burden on middle-class individuals? Many doubt the impact of the policies given the ongoing unemployment and financial strain faced by so many households. The call for more transparent and detailed explanations from the finance ministry remains strong.

While the Government's efforts are appreciated, there is a pressing need for more actionable steps to provide substantial relief to those most affected by the pandemic.

Conclusion

Budget 2021 marks a significant stride towards economic recovery. However, the challenge lies in effective implementation and transparency. As the government continues to address the pressing needs of the taxpayer, greater clarity and accountability will be crucial.