Expectations of Salaried Class Taxpayers From Budget 2022

The mega economic event 'Budget 2022' is less than a fortnight away. So, as the Covid threat in the country continues with the new Omicron variant and work from home continues to be the new normal here below are listed expectations of the salaried class taxpayers.

Increase in the income tax limit:

Salaried class taxpayers have heightened expectations with regard to increase in the income tax limit as the same has not been raised in the last few years. The Big Four taxation entity Deloitte has advised the government to raise the threshold for the highest tax rate to Rs. 20 lakh from Rs. 10 lakh.

"To align individual tax rates with corporate tax rate, it is advisable to reduce the highest tax rate from 30% to 25%... Therefore, the proposed highest slab rate (including surcharge and cess) can be reduced to 35.6% from 42.7%," Deloitte India is quoted as saying in a leading publication.

Increase in Standard Deduction limit:

Employees are also expecting an increase in standard deduction limit. As per the Income tax, standard deduction is allowed to salaried class at a standard rate which means a fixed amount is reduced from the annual salary which reduces the taxable income and hence the final tax payable. At present the standard deduction limit is capped at Rs. 50,000.

Work from home allowance:

Deloitte India iterating the demands of the IT professionals has suggested a Rs. 50,000 work from home allowance. "Considering the current situation, employees are working from home across businesses. Employees are likely to incur additional 'work from home-related expenditure', such as internet charges, rent, electricity, furniture, etc., and therefore, employers would need to provide allowances to meet these expenditures," Deloitte India said.

Tax deduction limit for repayment of home loan principal to be raised:

As per reports, the government could mull increasing the annual tax deduction allowed in respect of repayment of home loan principal amount from the current limit of Rs. 1.5 lakh to Rs. 2 lakh. The benefit is extended to taxpaying home loan borrowers under Section 80C. Also, there are expectations that the upcoming Budget 2022-23 may hike exemptions extended as part of various sections such as 80EEA, 24(b), 80EE and 80C among others.