What The Common Man Can Expect From Budget 2022

The ongoing Covid pandemic has been hurting the entire nation in more ways than one.

From the economy taking a hard hit, citizens still struggling for livelihood due to job losses and pay cuts, to the healthcare sector being tested each day, the problems just don't seem to end, especially because the virus is showing no signs of a slowdown since the past two years.

Amidst all this, the entire nation, irrespective of which sector you work in, has high hopes for the upcoming Union Budget 2022.

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Even as per the recently revealed findings from the pre-budget 2022 survey by Deloitte. a high majority of the industry leaders too, are positive about India¡¯s growth in the upcoming financial year 2022-23.

So let's have a look at some of the expectations that the common man can pin from Budget 2022, which is just about 10 days away.

1. Reduction In Income Tax Rates

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One of the biggest expectations from the upcoming Budget 2022, remains the reduction in income tax rates, as a lower rate on this direct tax can provide a major relief to most taxpayers.

Although the government did introduce a new tax regime that had different tax slabs and lower rates for some tax slabs, its biggest letdown was the foregoing of lots of exemptions and deductions, such as LTA, HRA, Section 80C, 80D etc. Even the highest tax rate under both old and new tax regimes remains the same, i.e.30% for income tax slab of above ?15 lakh annual income.

Moreover, there has been a reduction in corporate tax rates over the past few years. Hence, it's expected that the government should lower the tax rates for individuals as well, especially in wake of the ongoing pandemic that has impacted almost everyone¡¯s income, especially the lower-income slabs and middle class.

2. Expand Tax Deduction Limit Under Section 80C

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Section 80C under the Income Tax Act is probably the most heavily crowded section, which houses a host of tax deductions such as tax saver FD, ELSS investments, home loan¡¯s principal repayment, life insurance premium, etc.

Taking into consideration the long list of deductions available under 80C, the existing total exemption limit of just ?1.5 lakh often turns out to be insufficient to house so many deductions. Hence, it is expected that the upcoming Budget 2022 should provide an impetus for people to further invest and insure by boosting the upper cap on this section.

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3. Introduce ¡®Work From Home¡¯ Allowance

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Considering the current pandemic struck circumstances over two years, wherein lots of employees have been working from home across various businesses, employees are incurring additional ¡®work from home¡¯ related expenditure, such as internet charges, electricity, furniture, etc.

Many companies are either exploring hybrid working models or have even announced complete WFH for an indefinite period, especially with the pandemic showing no signs of a slowdown yet. So, the government introducing an additional deduction in the form of ¡®work from home¡¯ allowance in the upcoming Budget 2022 can be helpful for employees who are working from home.

Even as per the Deloitte's Budget 2022 expectations, employers would need to provide an allowance for employees to meet these WFH expenses. Hence, an additional WFH allowance of ?50,000 is recommended.

4. Separate Tax Deduction On Covid Medical Expenses

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The deadly first and second waves of Covid deeply impacted the lives of lakhs of people. Naturally, most of them, especially those who were hospitalized, had to incur significant Covid related expenses. And with the pandemic showing no signs of a slowdown, it's expected that people would keep on incurring these expenses in near future as well.

In the wake of all this, the government can introduce a separate tax deduction under Section 80D for covid related medical expenses, besides the already available tax deduction for health insurance premium paid for self, spouse, dependent children and parents under Section 80D.

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5. Increase Total Tax Deduction Limit On Health Insurance Under Section 80D

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For those who had either not taken health insurance yet or were under-insured with a low amount of health insurance, there could not have been a bigger wake-up call than the ongoing Covid pandemic to make them realize the importance of adequate health insurance.

The government can thus provide a further impetus for taxpayers to purchase health insurance and timely pay its premiums by increasing the upper cap on health insurance premiums under Section 80D. Click Here to know the benefits of health insurance and the existing tax benefits on it.

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