Expectations For Individuals in Union Budget 2022-23

The Finance Minister has committed to draw more attention towards demand generation, job creation, and stabilizing the Indian economy.

These expectations highlight the loopholes, conflicts, and asymmetry within the provisions of the Income-tax Act, 1961 (“Act”) that needs to be looked into and considered in the coming budget to bring clarity in the law and to remove the bridges and gaps.

Pandemic Related Reliefs

Since the onslaught of the pandemic and its impact on the taxpayers both financially and morally, the government announced multiple packages to help the affected economy and rejuvenate it. The government at that time considered giving tax reliefs for financial assistance received and providing deductions for the expenses on medical treatment.

In response to the assistances and packages, below press releases were issued:

➢ Income tax exemption to taxpayers receiving financial help from their employers and other sources for meeting the expenses incurred on medical expenses related to covid
➢ In case of death of taxpayer due to pandemic, any financial assistance received by his family member shall be exempt subject to-
➢ Provided by Employer: Exempt without any cap

➢ Provided by a person other than an employer: exemption limited to Rs. 10 lakhs in aggregate.
➢ Various deadlines under the Act were extended.

It was mentioned that necessary legislative amendments shall be made in the press releases. However, no legislative amendments have been made. In our view, it is expected that in the upcoming budget, required amendments related to the press releases will be legalised.

Increase in Limit under Section 80C

PPF is used as a means of savings by entrepreneurs and professionals. The present limit of such PPF contribution is Rs. 1,50,000 which has not been increased for several years and requires reconsideration.

Hence, as per our assessment, it is expected that the government will increase the ceiling of PPF contribution to Rs.3,00,000. In our view, this may further boost the domestic savings.

Increase in Scope of Section 80D

Section 80D of the IT Act allows deduction of up to Rs. 50,000 from gross total income in respect of any expenditure incurred on the medical treatment of a senior citizen (60 years or above) provided he is not covered under health insurance.

In our view, non-discriminating features of Pandemic on the basis of age should be considered by the CBIC and necessary changes may be made to increase the scope of the section and include all the persons or increase the current limit under section 80D of Rs. 25000 for citizens having less than 60 years of age.

Relief for Salaried Employees

In this pandemic era, employees had not only to spend extra to fight from Covid-19 but also undertake several additional expenses like:

➢ internet and telephone charges
➢ setting up of home office incidentals
➢ extra electricity bills
➢ rental charges

In view of the above-cited reasons and many more it is the need of the hour, that the Government should provide an allowance in the upcoming Budget 2022 to provide tax relief to employees on expenses incurred for carrying out office works from home.

Standard Deduction Limit

Currently, as per the provisions of the Act Rs. 50,000 is allowed as a standard deduction to salaried taxpayers from Income from Salary.

It is expected that the Government should increase the Standard Deduction limit as cited above from Rs 50,000 approximately by 30-35% to ease the tax burden of the employees, keeping in mind the rate of inflation and increased cost of living.

Interest on Housing Loan-Self Occupied Property

At present, an Interest deduction on housing loans for Self-Occupied property is limited to Rs. 2 Lakh. In our view, there is a need to increase Rs 2 lakh tax rebate on housing loan interest rates to at least Rs 5 Lakh to provide much-needed relief to homebuyers and the sector.

Taxability of Cryptocurrencies

Scope of Cryptocurrencies is increasing in the coming times considering the size of the market, the amount involved, the risk coupled and the rising investor base of such market-making government to regularize and contemplate changes in the income tax laws to bring cryptocurrencies under the tax net.

In the present times, investors are treating cryptocurrencies as assets and not currency and thereby paying capital gains tax on their transfers, and thus recognition in the law would bring about greater certainty in this aspect.

Currently, there is neither regulatory clarity nor any ban on the use of cryptocurrencies in the country and the upcoming budget could solve all hurdles and ambiguity and pave way for smoother operations in the market.

Following factors will bring stability and remove the ambiguity not just in terms of institutional regulation, but also through a better understanding of digital assets

➢ Recognising cryptocurrency as a legitimate tradable asset under SEBI’s oversight
➢ Treating it as an investment instrument
➢ Creating more certainty around its taxation

A Bill was expected to be presented during the Winter Session of Parliament. However, the bill was not introduced. It is highly expected that the ministry would consider in budget the taxability of cryptocurrency and would also help in clarifying the applicability of GST on trading, and brokerage activities related to such market.

Employees Provident Fund

In Budget 2021, the Government proposed to levy tax on income on Provident Fund (PF) contributions above Rs 2.5 lakhs in a year. This limit was further increased to Rs 5 lakh for PF accounts having no contribution from employers.

This limit is harsh for EPF accountholders planning their own retirement and contributing to PF to maximize their savings. As per our understanding, in the upcoming Budget 2022-23, the Government should raise the Rs 2.5/5 lakh limit to at least Rs 7.5 lakh.

Thus, it is expected that the finance minister will consider the above hardship and related amendments would be made in the upcoming budget.

We hope you found this article useful. Please feel free to write to us on any of the email ids mentioned below, should you need any more information:

Amit Maheshwari: amit@akmglobal.com

Sandeep Sehgal: sandeep.sehgal@akmglobal.com

Yeeshu Sehgal: yeeshu.sehgal@akmglobal.com

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