The New Year not only brings a new ray of hope and excitement but also ignites the expectations of taxpayers regarding the presentation of the Union’s budget for the upcoming financial year.
Any reduction in income taxes results in a direct increase in disposable income in the hands of taxpayers.
Now, with a protracted pandemic, taxpayers are eagerly awaiting further income tax cuts, so they have more disposable income. Some of the income tax breaks that taxpayers expect from the 2022 budget are explained here.
Tax level
Despite the government offering and increasing tax breaks, there is always a gap between taxpayers’ expectations and the Department’s tax relief.
Budget 2020 is the last chance when income tax bracket reduction is granted through the introduction of an alternative tax regime in which individual taxpayers can benefit from lower tax rates but at the cost of giving up the benefits of various deductions and exemptions.
In the 2022 budget, taxpayers expect the government to change the income tax bracket again, to give taxpayer relief.
It would benefit the taxpayers if the basic exemption limit for all taxpayers was set at Rs 5 lakh, while income up to Rs 10 lakh is taxed at the nominal income tax rate is 5%. Tax rates on taxable income above Rs 10 lakh can be streamlined accordingly.
Increase immunity
A large proportion of individual taxpayers belong to the salaried class. Considering the current level of inflation, the standard deduction currently available on wage income should be revised from Rs 50,000 to a minimum of Rs 1 lakh.
People without health or life insurance are currently using it due to uncertain medical costs and increased risk of life. With the rise of medical claims, insurance companies have increased their premiums, resulting in increased costs for taxpayers.
Exemptions for Covid patients and their families
The government has provided a waiver of financial assistance received from an employer or family to meet the costs of Covid-19 and in the event of the death of a person with Covid-19.
The government press release says that the necessary legislative amendments will be proposed, but none of these have been announced so far. Considering that the budget period is now nearing the end, the government may propose the necessary legal amendments in this regard.
The pandemic has affected all walks of life and currently, it is difficult for governments to make decisions without analyzing the impact. It is hoped that the government will work to make this budget more pandemic-focused and more empathetic to balance the unforeseen losses and hardships facing taxpayers.
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