Tax Relief

Price range Expectations for 2022: How FM Nirmala Sitharaman May Supply Tax Breaks to Covid Sufferers and Their Households

Hardly hit by the pandemic, job loss and falling income, the common man looks to the FM with great hope.

It’s budget time again and the countdown to the Union’s 2022 budget has begun. If the pandemic leaves no room for maneuver, Finance Minister Nirmala Sitharaman will most likely present her fourth budget on February 1 of this year.

Last year the government announced several stimulus packages to revitalize the economy hit by the COVID pandemic. It had pursued countercyclical fiscal policy to stabilize the business cycle. This policy requires the government to cut spending / raise taxes in good times and increase spending / reduce taxes in bad times.

“These policies have largely helped the Indian economy recover from the recession. Typical economic recoveries come in V, W, Z, U, and L shapes. However, economists are starting to believe that the recovery from COVID-19 could be K-shaped, as tech and large corporations have recovered faster than small businesses and industries directly affected by COVID-19, such as the hospitality industry, “says Naveen Wadhwa, DGM, Taxmann.

Although these stimulus packages accelerated the recovery, they also resulted in higher inflation. The minutes of the US Federal Reserve’s meeting signaled that the central bank could raise interest rates earlier than expected. This is a signal that the Indian government may also consider reducing the liquidity of the market.

Be that as it may, hit hard by a pandemic, job loss and falling incomes, the common man looks to the finance minister with great hope.

Here we look at how the Union budget 2022-23 Covid patients and their families could reduce taxes:

Given the devastating effects of the COVID-19 pandemic, it should be noted that the central government, state governments, employers, friends and philanthropists are providing financial aid to infected people and their families. Nevertheless, many people in the country do not receive any financial support and are fighting on their own.

Tax experts believe that these individuals should receive a tax deduction in relation to the amount they incur from the Covid treatment. The government should consider giving tax breaks for this financial assistance and deducting medical treatment costs.

“The government issued a press release dated June 25, 2021 providing that taxpayers who receive financial help from their employers and well-wishers to cover the cost of treating Covid-19 will receive an income tax exemption. So any amount that the employer or someone else receives to treat Covid-19 would be tax-free, “says Wadhwa.

If a taxpayer dies of COVID, all financial support that his family member receives is exempted without restriction if the financial support is obtained from the employer of the deceased. However, if the financial assistance is drawn from someone else, the allowance is limited to a total of Rs 10 lakh.

In the press release it was pointed out that the necessary legislative changes should be made in due course. However, no change has been made yet. This will allow the government to make the necessary changes in the upcoming budget.

“Currently, Section 80D of the Income Tax Act allows up to 50,000 rupees to be deducted from total gross income in relation to medical expenses for an elderly citizen (age 60 or over) who are not insured. Thus, the medical expense allowance is deductible if two conditions are met. Firstly, the person paying should be a senior, and secondly, no health insurance has been taken out for that person, ”says Wadhwa.

“It is recommended that the scope of Section 80D be extended to everyone (regardless of age) to allow for deduction of expenses for medical treatment for Covid-19 for themselves or a family member,” he adds.

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