The Finance Ministry has released Rs 9,871 crore as a grant to 17 states.

The Finance Ministry has released Rs 9,871 crore as a grant to 17 states.

The Finance Ministry announced on Tuesday that it had released the fifth monthly instalment of the revenue deficit assistance to 17 states, totalling Rs 9,871 crore. Article 275 of the Constitution provides the states with the Post Devolution Revenue Deficit Grant.

The grants are distributed in monthly instalments in accordance with the 15th Finance Commission’s recommendations to close the revenue gap in the governments’ accounts following devolution. The commission has recommended that the 17 states get this award in the years 2021-22.

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On August 9, 2021, the Department of Expenditure released the fifth monthly instalment of the Post Devolution Revenue Deficit (PDRD) grant to the states, totalling Rs 9,871 crore, according to a statement from the ministry.

In the current financial year, a total of Rs 49,355 crore has been distributed to eligible states.

Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Karnataka, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttarakhand, and West Bengal are among the states nominated for the PDRD Grant by the Fifteenth Finance Commission.

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In the financial year 2021-22, the Fifteenth Finance Commission has suggested a total PDRD Grant of Rs 1,18,452 crore for the 17 states. So far, Rs 49,355 crore (41.67 per cent) has been released from this total.

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Budget 2021 Expectations: Taxpayers want the old income tax regime to continue

In the last year’s Union budget, Finance Minister Nirmala Sitharaman proposed a new income tax regime that included seven tax slabs – Nil, 5%, 10%, 15%, 20%, 25%, and 30% – compared to four tax slabs under the old income tax regime – Nil, 5%, 20%, and 30%. Both tax regimes will proceed and it will be optional for taxpayers to pick a regime.

Since the new income tax system has lower income tax rates between Rs 5 lakh and Rs 15 lakh, there will be no tax exemptions and deductions will be available in the regime.

budget 2021

As a result, the existing benefits of Rs 5 lakh in the form of exemptions and deductions applicable under different provisions of the old income tax system will be lost to the salaried taxpayer by moving to the new income tax regime.

Under the old income tax system, taxpayers are entitled to a deduction of Rs 2 lakh u/s 24 of the Income Tax Act on interest charged on home loans in the financial year. In addition, an extra tax gain of up to Rs 1.5 lakh is also applicable to U/S 80EEA of the Income Tax Act, if the interest is charged on a home loan taken to purchase an affordable home, subject to certain conditions.

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Apart from the interest on the home loan, a typical salaried taxpayer will also lose the benefits of the HRA exemption, Standard Deduction, which amounted to Rs 50,000 in the financial year (FY) 2019-20, deductions u/s 80C to Rs 1.5 lakh, deductions up to Rs 50,000 u/s 80CCD(1B) on voluntary contributions to the Tier-1 accounts of the National Pension Scheme (NPS), deductions of up to Rs 75.000 u/s 80D on the health insurance premium paid for self-employed individuals and their family, as well as the premium paid for senior citizens’ parents or the costs incurred for their treatment.

So, taxpayers hope that the Finance Minister will continue to enforce the old income tax system as an optional one this year and in the future as well.

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