- Date : 30/01/2022
- Read: 3 mins
Jobs losses, salary cuts, and increased expenses, the salaried class has not had it easy in the last two years. The common man is now hoping that relief comes in the form of tax exemptions in Budget 2022.
In the last three to four years, there have been no major revisions in income tax slabs or rates. Expenses have shot up, but the salaried class continues to shell out taxes, feeling the pinch, especially in the pandemic years marred by job losses and pay cuts.
Now the countdown to Budget 2022 has begun, and the salaried class once again is hoping to get some much-needed tax relief.
Also Read: Decrease Capital Gains Tax
In 2020, Finance Minister announced an optional tax regime. This new regime allows individuals to forgo deductions and exemptions like standard deduction, Leave Travel Allowance (LTA), House Rent Allowance (HRA), deductions available under 80C and 80D, among others. Both old and new tax regimes come with their own set of pros and cons. However, it has become cumbersome for taxpayers to pick the one that works best for them. Experts believe that the government should keep only one tax regime, which is easy to understand.
Under one tax regime, the government should increase the highest tax slab to ₹20 lakh; currently, it is at ₹15 lakh, many opine. This will be a crucial gamechanger for people who are just above the ₹15-lakh income category and below the ₹20-lakh one. With an increase in tax slab, they can enjoy more rebates and reliefs.
Tax exemption for WFH expenses
Another crucial expectation from Budget 2022 is to make work-from-home allowances tax-free. As the remote work model catches on, employees have to bear additional expenses like high-speed internet connection, ergonomic work chair, office table, and electrical bills. While employers are providing WFH allowances, making these tax-exempt will come as a big boost to the salaried class.
In a recent pre-Budget survey by KPMG, 19 per cent of people interviewed expected an increase in the ₹50,000 standard deductions for salaried people. Experts recommend that the standard deductions should be increased to ₹1,00,000 in the upcoming budget.
Change need in 80C, 80D limits
There has been no change in Section 80C and 80D limits for a while, and this is on the cards. According to the survey, 36 per cent of people are hoping for an increase in the Section 80C deduction limit. This will incentivise more people to make investments in schemes like ELSS.
COVID-19-related expenses have pushed people to dig into their savings. The finance ministry might consider providing deductions under Section 80D to provide relief for families hit by the virus.
The government has seen a 61 per cent increase in net direct tax collection in the fiscal period until December 16, 2021, compared to a year back. This makes Budget 2022 a suitable time to announce some exemptions and reliefs. Under Section 80EEA, the government may increase deduction limits to give a boost to the residential real estate market.
Like every year, the salaried class is full of hope ahead of Budget 2022. And if experts are to be believed, they will not be disappointed.
Also Read: Upcoming Budget Expectations
In the last three to four years, there have been no major revisions in income tax slabs or rates. Expenses have shot up, but the salaried class continues to shell out taxes, feeling the pinch, especially in the pandemic years marred by job losses and pay cuts.
Now the countdown to Budget 2022 has begun, and the salaried class once again is hoping to get some much-needed tax relief.
Also Read: Decrease Capital Gains Tax
In 2020, Finance Minister announced an optional tax regime. This new regime allows individuals to forgo deductions and exemptions like standard deduction, Leave Travel Allowance (LTA), House Rent Allowance (HRA), deductions available under 80C and 80D, among others. Both old and new tax regimes come with their own set of pros and cons. However, it has become cumbersome for taxpayers to pick the one that works best for them. Experts believe that the government should keep only one tax regime, which is easy to understand.
Under one tax regime, the government should increase the highest tax slab to ₹20 lakh; currently, it is at ₹15 lakh, many opine. This will be a crucial gamechanger for people who are just above the ₹15-lakh income category and below the ₹20-lakh one. With an increase in tax slab, they can enjoy more rebates and reliefs.
Tax exemption for WFH expenses
Another crucial expectation from Budget 2022 is to make work-from-home allowances tax-free. As the remote work model catches on, employees have to bear additional expenses like high-speed internet connection, ergonomic work chair, office table, and electrical bills. While employers are providing WFH allowances, making these tax-exempt will come as a big boost to the salaried class.
In a recent pre-Budget survey by KPMG, 19 per cent of people interviewed expected an increase in the ₹50,000 standard deductions for salaried people. Experts recommend that the standard deductions should be increased to ₹1,00,000 in the upcoming budget.
Change need in 80C, 80D limits
There has been no change in Section 80C and 80D limits for a while, and this is on the cards. According to the survey, 36 per cent of people are hoping for an increase in the Section 80C deduction limit. This will incentivise more people to make investments in schemes like ELSS.
COVID-19-related expenses have pushed people to dig into their savings. The finance ministry might consider providing deductions under Section 80D to provide relief for families hit by the virus.
The government has seen a 61 per cent increase in net direct tax collection in the fiscal period until December 16, 2021, compared to a year back. This makes Budget 2022 a suitable time to announce some exemptions and reliefs. Under Section 80EEA, the government may increase deduction limits to give a boost to the residential real estate market.
Like every year, the salaried class is full of hope ahead of Budget 2022. And if experts are to be believed, they will not be disappointed.
Also Read: Upcoming Budget Expectations
