Budget 2021 is expected to provide temporary tax breaks in the form of rebates to taxpayers who suffered salary cuts due to the pandemic, reported Financial Express.
Amid rising apprehensions of continuity of remote working even after the pandemic, perks like company cars and free meals are no longer appetizing. In such a case, to maintain employees' motivation levels, employers might contemplate compensation regarding home-office furniture expenses and medical insurance. Consequently, the forthcoming budget must include a stimulus package for salaried employees, said the report.
The government's work from home advisory included several costs that employees had to incur. And while most companies compensated their employees for additional expenditures, they are required to pay tax on these reimbursements as well. This gives the government another window for a deduction, it added.
In Budget 2020, the government introduced new tax slabs with reduced rates for an annual income of up to Rs 15 lakh for those foregoing exemptions and deductions under a simplified tax regime. The new income tax system was optional, and a taxpayer could choose to remain in the existing regime with exemptions and deductions.
The government had removed around 70 existing deductions, including House Rent Allowance, Leave Travel Allowance, standard deduction, and 80C for those choosing older regimes.
With inputs from PTI