Taxpayers expect a lot of relief on the income tax front from the 2022 Union budget. Of these, an increase in the standard deduction ceiling is clearly the main demand of the ordinary man of Finance Minister Nirmala Sitharaman. According to Abhishek Soni, co-founder and managing director of Tax2win, the basic exemption limits were last revised in 2017-2018.
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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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Clarity on the taxation of crypto-currencies
As the government awaits the Cryptocurrency Bill, much-needed clarification is expected on its taxation in the upcoming Union Budget 2022. on the sale and purchase of cryptocurrencies, etc. which we hope will be clarified in the budget session,” Soni said.
Rectification of the income tax slab
The Department of Finance may revise the personal income tax bracket in this year’s budget. Many experts believe that the two tax systems 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 did not bring any major relief to the working class,” Soni explained.
Standard deduction and homework deduction
The 2022 budget could introduce tax-free homework 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 during this financial year, it could be possible to increase the tax deduction ceilings. For example, the standard deduction available for those with wage income may be increased, currently at Rs 50,000. This can be adjusted for inflation every year,” he said.
Hike within the 80°C deduction limit
Tax experts, however, say that the Rs 1.5 lakh limit on deduction under Section 80C for miscellaneous current tax-saving investments/expenses has remained constant for nearly half a year. -decade now. Given the current economic scenario, encouraging demand is one of the government’s priorities.
“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. Additionally, a special deduction related to COVID expenses may be allowed under Section 80D or 80DDB to provide tax relief to COVID-19 patients and their families,” he said.
ITR forms need to be further simplified
ITR forms for individual taxpayers currently have many disclosure/confirmation requirements, especially in cases where the taxpayer has income other than salary, interest, etc. Such confirmations are required, even when they do not apply in the case of the majority of taxpayers. Also, quite often, even after filling in all the correct details and passing the validation checks, technical errors occur at the time of final ITR submission/verification.
Tax experts say the budget should make a sincere effort to simplify online forms and make confirmations/disclosures optional for individual taxpayers.
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