Budget expectations: Tax Relaxations

28 Jan 2022 , 11:18 AM

The Union Budget 2022-23 is just around the corner with Hon. Finance Minister Nirmala Sitharaman scheduled to announce the same on February 1, 2022.  Announcements related to income tax will be keenly watched out for.

The country’s taxpayers and businesses await announcements related to income tax as no major benefits were announced by the government in the last budget. Changes to the existing tax regime has been a constant demand from a large section of taxpayers and industry bodies. Last year’s budget focussed mainly on healthcare, stimulus packages, and rural infrastructure development. This year, with the threat of Omicron looming, the budget expectations continue to target economic recovery, ease of compliance, and some respite to the common man.

Following are some of the key expectations from tax point of view from the upcoming Union Budget 2022:

1. Increase in income tax slab / limit of up to Rs. 5 lakhs for individuals, up to Rs. 7.50 lakhs to Women and up to Rs. 10 lakhs for senior citizens
2. Increase of limit of standard deduction available to salaried taxpayers and pensioners from current Rs. 50,000 by at least 30%. This is on account of jump in household expenses due to inflation, in part due to Covid 19.
3. Investment in long term FDs (more than 5yrs) to be fully exempted from tax ambit
4. Extension of concessional LTCG rate to investment in start-up
5. Investment in Infra bonds, either public or private, to be exempted from tax
6. Removal of long term capital tax for listed and unlisted shares in order to boost the capital market
7. Removal of GST for property purchase done by Sr. Citizens and Women’s to boost the housing market
8. Deductions for home loan principal repayment, over and above the existing 80C
9. Hiking the Rs 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act to at least Rs 5 Lakh
10. Covid relief package for affected families qualifying under EWS/LIG, exempting them from taxation for 1 year in case of admission to hospital and 3 years in case of death due to Covid
11. Reduction of GST on insurance premium paid, currently being 18% and removal of tax on annuity pension

The author of this article is Mr. Ashish Jain, Managing Director, Star HFL

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com