Union Budget 2022: What the common man is expecting?
With just one day to go for the Budget 2022 presentation, the common man is relying on Finance Minister Nirmala Sitharaman for subsidies, incentives, and tax deductions, among other benefits. In wake of the COVID-19 pandemic, the affordability gap has heightened the public's expectations from the government. Here are some key expectations that the common man has from the Union Budget this year.
Why does it matter?
Sitharaman will introduce the Union Budget for Fiscal Year 2022-23 in Parliament on Tuesday. The main demand of taxpayers to the Finance Minister is an increase in the standard deduction limit. It was last modified in the interim budget in 2019 when it was raised from Rs 40,000 to Rs 50,000. Besides, women entrepreneurs have high expectations from the Centre for loans.
India has high individual tax rates
India has a 37% surcharge on top of a 30% tax rate, with a maximum marginal rate of 42.74% for individuals. With the introduction of the simplified tax regime, it was expected that tax rates would be reduced overall. However, changes under the new tax regime are said to be minimal. The common man wants a reduction in the maximum marginal tax.
Individual taxpayers want rates similar to corporates: Expert
"From a corporate tax perspective, while the deduction and exemptions have been minimized, the government has been able to stabilize the tax rates to 25% over a period of time. (with 12% of surcharge the rate comes to 29.12%)," said Saraswathi Kasturirangan, Partner, Deloitte India. "There is an expectation for similar tax rates being applicable to individual taxpayers as well," she said.
Allowance for home office deduction
Amid rising COVID-19 cases in India, 'Work From Home' is projected to become permanent. While a standard deduction is available, it was in place before the pandemic, and exemptions for other expenses like conveyance were removed when it was implemented. "The expectation is that a deduction for home office allowance will be provided for employees who are working from home," said Kasturirangan.
Maximum deduction for house loans should be increased
At present, the deduction for interest payments on self-occupied properties is capped at Rs. 2 lakh. Furthermore, if construction does not finish within 5 years, the limit is reduced to Rs 30,000. Hence, the Rs. 2 lakh tax deduction on housing loan interest rates under section 24 of the I-T Act should be increased to at least Rs. 5 lakh.
Tax benefits offered to senior citizens
Currently, a senior citizen can claim deduction on income received on savings and fixed deposits with banks, post offices, or co-operative banks for an amount up to Rs. 50,000 under Section 80TTB of the IT Act. The government may explore improving some tax benefits offered to senior residents, like raising the exemption limit on such interest to at least Rs. 1 lakh per year.
Simplification of ITR forms
The Income Tax Return (ITR) forms for individual taxpayers currently contain a lot of disclosure obligations, especially for income other than salary or interest. Sometimes, even after filling the correct details, there are technical errors that pop up during the final submission of the ITR forms. Tax experts say that an attempt should be made to simplify such online forms.
