Union Budget 2022: service class expectations

Union Budget 2022 will center on the recovery from the consequences of the Covid-19 pandemic, for the service class.

The salaried class has expected that Budget 2022 will have relief in taxes through Standard Deduction limit changes, will have a new tax regime, and also work from home policies.

Limit of 80C must increase:

The middle class expects- the government should increase the section 80C limit to Rs. 2.5 lakh per annum. Section 80C of the Income Tax Act allows certain expenditures and investments to be exempt from tax.  Following this one can claim tax deduction benefits for payment towards – life insurance policies, provident fund, tuition fees to educate max 2 children, construction or purchase of residential property, a fixed deposit with a minimum tenure of 5 years, senior citizen saving scheme. This will ultimately reduce the burden of tax on the middle class falling under this. And altogether it will control inflation in the nation. ‘Ease of  Living’ can be achieved through this. – as per sources said.

Tax relief limit for health Insurance under 80D must increase  :

There must be a hike in the tax exemption limit for health insurance under Section 80D. Currently, health insurance claims tax-exempt up to Rs 25,000 for age under 60 and up to Rs50,000 for more than 60. Ideally expected it must be doubled, so that the individual at least can assure enough healthcare facilities in medical emergencies as per requirement, which has increased exponentially in this pandemic. Statics say that over 70 percent of healthcare bills are paid from personal savings.

So, increasing the limit for healthcare insurance will encourage more and more people to go for health insurance.

Standard Deduction for salaried person must increase:

There must be a hike in Standard deduction, income tax relief for saving for kids’ education. Salaried individuals and pensioners can claim a certain amount under standard deduction by default without any investment or spending of money by the taxpayers. Currently deduction limit is Rs 50,000 from 2019 onwards. But this deduction seems low as of inflation and current times. The expenses increased for households because of the Covid-19 pandemic on account of increased medical costs and other work from home expenses. Thus there is a requirement for increment in the standard deduction limit from Rs. 50,000 to at least Rs 75,000.

As of the Covid-19 pandemic, other countries too have introduced tax deduction on covid related medical expenditures and work from expenditure like U.S., U.K, Cannada, etc.

Tax deduction for WFH employees:

There must reside a tax break for employees working from home (WFH). As WFH has burdened employees for spending on internet connectivity, furniture, or other assets of office use. So, clearly, there must be an introduction to a new deduction or an increase in the Standard deduction limit expected for those working from home.

All pre-budget expectations are reported as per sources.