Income tax slab, rate changes expected in Budget 2022
Income tax slab, rate changes expected in the 2022 budget: many reliefs on the income tax front are expected by taxpayers from the 2022 Union budget.
Income tax slab, rate changes expected in Budget 2022: A lot of relief on the income tax front is expected by taxpayers from the 2022 Union budget. In a pre-budget survey recently conducted by KPMG, most respondents said they expected to an increase in the basic income tax exemption limit of Rs 2.5 lakh.
“On the personal tax front, most respondents expect an increase in the basic income tax exemption cap of INR 2.5 lakh. Respondents also support a revision to raising the top income bracket by INR 10 lakhs and above, and increasing the existing Section 80C deduction limit by INR 1.5 lakhs,” the survey report states.
According to Abhishek Soni, co-founder and CEO of Tax2win, the basic exemption limits were last revised in 2017-2018. We therefore strongly expect this budget to increase the upper limit of the basic exemption so that it can help middle-class taxpayers reduce their tax payable somewhat.
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When asked about the most anticipated change for individual taxpayers during the survey, the following responses were provided:
- 29% of respondents wanted the government to raise the income ceiling by Rs 10 lakh at which the top marginal tax rate of 30% is triggered.
- 36% of the respondents hoped for an increase in the Section 80C deduction limit of Rs 1.5 lakh.
- 19% of respondents expect an increase in the standard deduction limit of Rs 50,000 for the salaried class.
- 16% expect tax-free allowances/benefits for employees, bearing in mind working from home.
Increased limits of sections 80C and 80D
“The government should allow a separate deduction under 80C on the principal repayment of home loans. The limit under section 80C has not been increased for a long time and many items are already covered or eligible under the limit of Rs. 1,50,000 already. Therefore, it is expected to be improved this year,” Abhishek Soni told FE Online.
“Furthermore, in view of the increase in house prices over the years, the government should allow the separate deduction for the repayment of principal on house loans, i.e. it should not club within the limits of Article 80C,” he added.
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According to Archit Gupta, founder and CEO of Clear, the limits of section 80C and section 80D should definitely be increased this year because they have been the same for so long. In addition, the high collection of direct taxes during this fiscal year may help to revise these limits upwards.
“A higher deduction under Section 80C may be allowed for the Equity Linked Savings Scheme (ELSS), or a separate limit may be set to encourage more investment in mutual funds in India”, did he declare.
New tax regime:
Archit Gupta said the finance ministry may revise the personal income tax slab in this year’s budget.
“Many experts believe that the two tax regimes still confuse the common man. The government could consider increasing the top tax bracket to Rs.20 lakh instead of Rs.15 lakh or allowing some deductions to make the new scheme more attractive. The 2021 budget has brought no major relief to the working class,” he said.
Modification of the standard deduction ceiling
Abhishek Soni also said that to ease the tax burden on employees and keep in mind the inflation rate and the purchasing power of the employee, this budget is expected to increase the limit of standard deduction by Rs. 50,000 to Rs. 1,00,000.
Archit Gupt also hopes that the 2022 budget can introduce tax-free work-from-home allowances for employees. Allowing deductions for these expenses will increase take home pay, ultimately creating demand for goods and services in the country. “Due to the high collection of direct taxes this fiscal year, it may be possible to increase tax deduction limits. For example, the standard deduction available to those with wage income may be increased, currently at Rs.50,000. This can be adjusted for inflation every year,” he said.
No tax rate change planned?
Amid all the big expectations for the 2022 budget, EY experts are of the opinion that corporate and personal tax rates will not change this year. “Corporate and personal tax rates are expected to remain unchanged. The standard customs duty rate may remain the same. There could be some movement in duty rates to encourage value addition in India and correct the inverted duty structure,” EY said.
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