What to Expect From Budget 2022 for Individuals and Salaried People
Over the last two years, individuals, especially salaried people, have taken quite a hit because of the pandemic. Work from home has not only increased expenses such as electricity and WiFi bills but has also put a strain on take-home salary. Naturally, people hope that the government will step in and ease some of these troubles through their Union Budget announcements.
Here are the top expectations from the market for individuals and salaried people from Budget 2022:
1. Hike in Standard Deduction
For individuals, salaried people and pensioners, the standard deduction is a benefit that allows a certain flat amount to be deducted from the taxable income. Currently, it stands at ₹50,000*. Given the rise in household expenses, medical expenses and other work-from-home expenses that individuals have had since the pandemic, there is an expectation that the government would increase that Limit to give individuals more income in hand. Some are hoping to raise the Limit to at least ₹75,000 in the Budget.
2. Tax Slab Revision
Another popular expectation from salaried individuals is a change in the tax slab. Experts suggest that lowering the highest tax bracket implication from 30% to 25% might relieve people. There is also a hope that the basic income tax exemption limit will be raised from the current ₹2.5 lakhs.
3. Increase in 80C Limit
At present, individuals are permitted a deduction of up to ₹1.5 lakhs under Section 80C of the Income Tax Act. That includes various deductions such as tax-saving deposits, contributions to public provident funds, buying life insurance and health insurance, etc. Given the pandemic and rising costs, once again, experts and individuals alike are hoping for a boosted tax relief in this area, perhaps an increase of another ₹1 lakh at the very least.
4. Tax Relief on Children’s Education
Saving for children’s higher education is essential financial goal individuals aim for. They often set aside a considerable portion of their income for this purpose. Apart from the Sukanya Samriddhi Yojana for female children, there is no tax relief for children’s higher education. Given the rising inflation and higher education expenses, there is an expectation of introducing something in the Union Budget of 2022.
5. Encouragement for Health Insurance
Health insurance matters to financial planning for individuals. Experts believe that the government should encourage people to get health insurance and the right amount of sum assured according to their health and financial status. To promote this, they believe that the government should increase the tax relief under Section 80D to incentivize individuals to get their health covered by insurance.
6. Work From Home Tax Reliefs
Finally, with a new class of workers has emerged who are working remotely from home, certain standard expenditures have increased for such individuals. Considering the shift in the work culture, people are hoping that the government will account for the same in the Union Budget of 2022 and introduce special deductions and tax reliefs for those working from home.
This article has outlined the most anticipated changes from Budget 2022 that will provide some financial relief to individuals. Now, it is up to the government to decide what exemptions to provide and how best to cater to the needs of their population. The Union Budget of 2022 will be presented by the Finance Minister on 1st February 2022. Keep an eye out to find out what the changes are.
*₹50,000 (source – Cleartax as of 12th Jan 2022)
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