Adjusting tax slabs with the increase in other deductions can help the salaried taxpayer, specifically the below Rs 50 lakhs p.a. bracket with more money in hand.
Common man Budget 2022 Expectations: The expectation of citizens from the upcoming budget remains high. Various relief measures are expected from the upcoming Budget 2022, such as deductions for the expenditure of Covid treatment for persons who do not have health insurance. It is expected by the common man that the government may provide tax relief to the people who are paying for medical treatment of Covid-19 on their own.
Neeraj Dhawan, Managing Director, Experian India, says, “Extended tax relief should be provided for the expenditure on medical treatment of the Covid affected to those who didn’t have medical insurance. These individuals have carried the devastating financial impact of Covid-19 on their own.”
Among other expectations, optimizing tax slabs for the salaried taxpayer is something that people are looking forward to. “The suggestion that is already in the circles for the government to consider is increasing the annual tax deduction limit for repayment of home loan principal under Section 80C of the Income Tax Act will be an ideal step forward,” says Dhawan. It is suggested that increasing it from the current cap of Rs 2 lakhs to Rs 5 lakhs will provide huge benefits to the salaried taxpayer and at the same time boost the real estate industry with increased housing demand. Further, adjusting tax slabs with the increase in other deductions can help the salaried taxpayer, specifically the below Rs 50 lakhs per annum bracket with more money in hand.
It is also expected that measures for digital skilling and technology incubation are taken in the upcoming budget. Dhawan points out, “The digital payment industry is playing an influential role in ushering transparency and formalization of the economy. To further promote the industry by supporting new business deployment solutions the government could consider incentivizing Venture Capitalists and Private Equity players and other investors to fund Research and Development and technology infrastructure up-gradation in India.”
Experts say helping the under-credited segment with access to unsecured loans provided by certain fintech will provide a significant domino effect for the entire upliftment of the society and the economy at large. A large population of India in the likes of the blue-collared workers, construction workers and house-helps who don’t fall under the formal employment segment require access to credit. “The government should consider providing incentives to these fintech companies that are lending to the under-credited to encourage more fintech to serve this segment and also effectively manage the risk being underwritten,” says Dhawan.
Additionally, industry experts say, in the upcoming budget an increase in the annual limit on tax-saving schemes under section 80C to encourage savings and investments could be welcomed. Along with a reduction in the lock-in period on tax-saving fixed deposits to 3 years from 5-years under this section.
To promote more millennials to invest in their education, experts say the budget could incentivise investments in education. In the absence of deductions, education investments can be exempted from long term capital gains with checks and balances in place to curb any misuse. Experts point out such measures will certainly result in higher returns for all stakeholders in the economy.
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