Budget 2022 – Will it Benefit the General Public?
Budget has been from years one of the favourite finance sessions for the general public. It is one of the few finance sessions which appeals to the masses and is listened by everyone, be it a business person or salaried individual.
Just like every year, this year’s budget is going to be announced on 1st February 2022 by the finance ministry of India.
This year also public is having some expectations from this budget which we will discuss here in the details.
Some Common Expectations from Budget this Year:
Increase in Tax Exempted Income Limit
Currently, Income up to ?2 lacs is exempted from tax. This limit has not been changed by the government in years. Moreover, it is hope of the public that the government should increase this limit to ? 5 lacs.
In previous budget, the government very smartly played on increasing the 87A rebate to ? 12,500 which was presented in such a way that it seemed like the there is no tax up to income of ? 5 lacs.
But it was not the case, If anyone having any income taxable at special rates like if you are having an equity short term capital gain of ? 5 Lacs than income up to ? 2.5 lacs is exempt and on another ? 2.5 lacs you need to pay tax @15 % which is ? 37,500.
So out of which you get a rebate of ? 12,500 if your income is up to ?5 lacs. And the net tax amount you need to pay comes to ? 25,000 plus surcharge.
In this way it was a gimmick to say that income up to ? 5lacs is not taxable but actually it is.
We hope that the government straightway increases the basic exemption limit from ? 2.5 lacs to ? 5 lacs in the upcoming budget which will actually benefit the taxpayers on ground.
Increase in Standard Deduction
At first standard deduction was introduced at ? 40,000 per year for salaried class people which was increased to ? 50,000 by finance act, 2019.
The salaried class is expecting this deduction to be increased up to ? 1 Lac this year due to reasons being increase in inflation, lower purchasing power, higher expenses in work from home setup by employees, higher medical expenditures etc.
It also to be noted that the standard deduction will be available for those people only who have opted for old tax regime.
Increase in 80C Deduction
The limit under 80C deductions is fixed at ? 1.5 lacs. This limit has not been increased by government for a long period of time.
80C covers a large number of investment options including PF, PPF, Life insurance premiums, tuition fees, home loan principal repayment and many others.
The last increase in the limit under this section was in year 2014. It is therefore expected that the limit should be increased to at least ? 2.5 lacs this year which will provide a good tax relief to the middle-class people.
Increase in 80CCD(1B) Limit
Currently, the investment in NPS can get you a deduction of ?50,000 over and above the 80C limit. This scheme is used by many salaried employees to save additional taxes.
But this amount is too less to build a good retirement corpus fund for the future. If the limit is increased to at least ?1 lac, it will help in generating the good pension fund for the investor plus help the assessee in getting a good tax relief.
Increase in Home Loan Interest Deduction
In current situations, the real state price has inflated so much that the interest of ?2 Lacs per year on home loan seems very small.
This limit was applicable from the year 2015 and seven years have been passed till now. Property rates are more than doubled from that time.
It is anticipated that the limit should be increased in this year’s budget.
Above are the most desired changes in the budget from the perspective of the general middle-class public.
Some more Changes Which Can Be Anticipated This Year:
- New schemes to boost up the Indian economy after the covid impact from last 2 years.
- Announcements and new schemes for improving education sector and Infrastructure in India.
- Changes in excise duty, custom duty, import duty and other cess to keep in check the inflation index.
- Tax laws for cryptocurrency trading and mining in India.
We hope that this budget will bring in some benefit for the honest tax paying citizens of the country which are long due by the government.