Union Budget 2022-23: Standard Income Tax deduction may rise by 30-35%, tax slabs to remain unchanged

 



The salaried taxpayer may have something to look forward to in the upcoming Union Budget 2022-23. The government may increase the Rs 50,000 standard deduction limit available to salaried taxpayers and pensioners by 30-35%, say reports.


The suggestion has been made by industry bodies and the finance ministry officials are mulling the changes. It is to be noted that those who opt for the new taxation regime are not eligible for the standard deduction.

One of the most common demands with respect to personal taxation is to increase the standard deduction limit by 30-35% given inflated healthcare-related expenses due to Covid-19, a finance ministry official told Economic Times.

The final decision on the proposal is yet to be taken and will depend on the latest tax collection data, the official added.

Many salaried taxpayers face increased personal costs such as electricity and internet with the implementation of work from home conditions, giving rise to demands that the standard deduction limit should be enhanced and revisited every year.

A standard deduction limit of Rs 40,000 was introduced by then finance minister Arun Jaitely in 2018 and later increased by Piyush Goyal to Rs 50,000 in the interim budget in 2019.

Sudhakar Sethuraman, partner at accounting firm Deloitte told Economic Times that the government should make it revisit the standard deduction limit on a regular basis for giving relief to taxpayers. He suggested that 20-25% hike should be given owing to periodic inflation and increased costs of working from home. He added several nations have introduced tax exemptions for those working from home due to the Covid-19 pandemic. This is due to increased expenditure such as setting up office at home and increased expenses due to the pandemic.

The report also noted that industry bodies such as Assocham and Confederation of Indian Industries (CII) have also made the demand of higher standard deductions during their pre-budget meetings.

Ashok Shah of NA Shah Associates said the standard deduction should at least be Rs 75,000 as the current limit is too low. It needs to be revised and linked to inflation as many countries have already done it, he added.


Although finance ministry officials have ruled out any changes in income tax slabs, the report added. They say the government took many bold reforms in the past but this is not a year for major reforms as we are still in the middle of a pandemic.



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