Personal Taxes

Finances 2022 Expectations – From personal earnings tax exemptions to WFH allowances, consultants record 10 calls for of taxpayers from FM

Only four more days are left in the announcement of Union Budget 2022 and one segment that is looking at the Finance Minister Nirmala Sitharaman with a lot of expectations is the common man. The expectations are high as the Budget 2022 is being presented amid the pandemic and this is the second such instance when it will be presented in the middle of the Covid-19 wave.

This budget is important from the standpoint of how aggressively the government pushes for the growth amid the Omicron wave, tax expert and Former President of Institute of Chartered Accountants of India (ICAI) Ved Jain tells Zee Business.

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Common man has had to suffer a lot in 2020-21 and 2021-22 because of high medical expenses and work from home (WFH) which have only increased their expenses. The hope is that government will give some relief in this regard, he added. It is expected that the government will use its experience of these two years in this budget announcement, he said further. It will not only be important but also give directions.

Rakesh Nangia, Chairman Nangia Anderson India also believes this budget to be a unique one. While he acknowledged that there will be challenges for the government, he said that the government will have to ensure that the consumption cycle takes gains momentum. The positive for the government is high tax collections this year. He emphasized on a need for striking a balance. He said that requirements of industry, consumers and tax related reliefs must be dealt with. Salaried class must be looked at, he added.

Expectations on Personal Income Tax front:

  1. Old Tax regime vs New tax regime: New tax regime which was proposed in February 2021 budget has not been very popular among the taxpayers. This is because in the individual taxpayer segment, a large chunk has savings. Some are forced savings like the EPF, and some are driven by necessities like LIC, PPF of NSC, Jain said. It is an opportunity for the government in this year’s budget to realign this and give one simple tax structure. Individual taxpayers must be encouraged to form their own social security net, he further added.
  2. In the wake of Covid-19 pandemic the government must also give higher deduction exemptions, the Former ICAI President said.
  3. Incentives for WFH must be given in this budget, Jain said.
  4. Exemption for senior citizens must also be revisited, Jain said.
  5. Income tax slabs which have not changed for 7-8 years must be looked at, Rakesh Nangia said. Basic exemptions up to Rs 2.5 lakh was done in 2014. After that, a rebate was introduced and only for those who have income less than 5 lakhs. People above this must also get tax rebates, he further said.
  6. Standard deductions must be increased which have remain unchanged over the last 2-3 years, Nangia said.
  7. The exemption limit under 80C and 80D must also be increased. In case of medical insurances, the exemption limits up to Rs 25,000 should be increased, Nangia said.
  8. No disruption is required at this stage in terms of taxations, Nangia urged the government to be it inheritance tax or wealth tax or any other tax. What we need is stability.
  9. Nangia also urges the government to revisit the sunset clause on affordable housing which ends in March 2022. Under this the government has given exemption up to Rs 1.5 lakh on interest rates for houses which are priced up to Rs 45 lakh.
  10. He also said that there should be no barrier on exemptions on interest on PF contribution for private and government employees. Currently, the interest income of up to Rs 2.5 lakh is exempted from tax for private employees. It is Rs 5 lakh for government employees.

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Finance Minister Nirmala Sitharaman will be presenting the budget on 1 February 2022.

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