The Union Budget 2022-23 will be presented by Finance Minister Nirmala Sitharaman on February 1. It's that time of year when people eagerly await announcements, with focus on those concerning income tax. Because the government did not announce any significant tax benefits last year, this time, taxpayers are looking for a budget that gives them more money to spend. This is certainly true given the hurdles the COVID-19 outbreak has posed to their livelihood.
Work-from-home allowance and tax relief
Apart from health expenses arising from COVID-19, the work-from-home, or WFH, situation meant additional strain on the pocket for most salaried individuals. They had to spend more on the internet, telephone, and electricity usage. Many people also set up a home office, which necessitated the purchase of furniture. In all probability, salaried individuals would be hoping for a work-from-home allowance that would cover these expenses and also provide tax relief. Deloitte, in a note, sought additional deductions of Rs 50,000 for those who are working from home.
Keeping in mind the ever-rising medical cost, the standard deduction - the one-time deduction from salary income - may be raised from the existing Rs 50,000 to Rs 1 lakh annually. This will help cover some of the medical costs.
Deloitte has advised that the highest tax rate of 30 per cent be reduced to 25 per cent in its pre-Budget estimates for 2022. It has also requested that the maximum tax rate threshold be raised from Rs 10 lakh to Rs 20 lakh.
Income tax exemption limit
The basic exemption limit for income tax can be enhanced from Rs 2.5 lakh to Rs 5 lakh. Individuals will benefit from more tax relief and liquidity if the basic exemption ceiling is raised.
Increasing Section 80D limit
Given the severity of the pandemic and the fact that many families' medical insurance coverage is insufficient, the deduction for mediclaim coverage if enhanced could be beneficial.
Deduction for COVID-19 treatment
There is no special deduction that covers the cost of treatment for COVID-19 patients who do not have health insurance. A separate deduction can be introduced.
Extending Leave Travel Concession Cash Voucher Scheme
The Finance Minister had announced the Leave Travel Concession Cash Voucher Scheme in October 2020. However, many people were unable to travel due to COVID-19 limitations enforced by the states. As a result, it's probable that many are hoping that the government would extend the scheme so that they can take advantage of the benefits.
Increase Section 80C limit
For quite a few years now, the maximum of Rs 1.5 lakh for deductions under Section 80C of the Income Tax Act, 1961, has remained unchanged. Individuals may expect the government to increase it to Rs 3 lakh annually.