Income Tax Slab, Rates Changes Expected in Budget 2022: A lot of relief on the income tax front is expected by taxpayers from the Union Budget 2022. In a pre-budget survey recently conducted by KPMG, most of the respondents said they expected an enhancement in the basic income tax exemption limit of Rs 2.5 lakh.

“On the individual tax front, most respondents expect an enhancement in the basic income tax exemption limit of INR2.5 Lakh. Respondents also support an upward revision in the top income slab of INR 10 lakhs and above, and an increase in the existing section 80C deduction limit of INR 1.5 lakh,” the survey report said.

According to Abhishek Soni, Co-founder and CEO, Tax2win, the basic exemption limits were last revised in 2017-18. So it is highly expected from this budget to increase the basic exemption limit so that it can help middle-class taxpayers to reduce their tax liability to some extent.

When asked about the most anticipated change for individual taxpayers during the survey, there were the following responses:

• 29% respondents wanted the government to enhance the income limit of Rs 10 lakh at which the maximum marginal rate of 30 per cent tax is triggered.
• 36% respondents hoped for an increase in Section 80C deduction limit of Rs 1.5 lakh.
• 19% respondents expect an increase in standard deduction limit of Rs 50,000 for the salaried class.
• 16% expect tax-free allowances/ perquisites for salaried individuals keeping in mind work from home arrangement.

Increase in Sections 80C & 80D limits

“The government should allow a separate deduction under 80C on the principal repayment of home loans. The limit uunder Section 80C has not been increased for a long time and lot of items are already covered or qualify within the limit of Rs. 1,50,000 already. Hence, there is a strong expectation that it will get enhanced this year,” Abhishek Soni told FE Online.

“Further, Considering the price increase in real estate over the years, the government should allow the separate deduction for the principal repayment of home loans i.e. it must not club in the limit of section 80C,” he added.

According to Archit Gupta, founder and CEO, Clear, Section 80C and Section 80D limits are certainly expected to be increased this year as they have been the same for so long. Also, high direct tax collection during this fiscal year may help with upward revision of these limits.

“A higher deduction under Section 80C may be permitted for the Equity-Linked Savings Scheme (ELSS), or a separate limit can be defined to encourage more mutual fund investments in India,” he said.

New tax regime:

Archit Gupta said the Finance Ministry may revise the personal income tax slab in this year’s Budget.

“Many experts believe that the two tax regimes still confuse the common man. The government may consider increasing the highest tax slab to Rs.20 lakh from Rs.15 lakh or allow certain deductions to make the new regime more enticing. Budget 2021 did not provide any major relief to the salaried class,” he said.

Standard Deduction limit change

Abhishek Soni also said that to ease the tax burden of the employees and keep in mind the rate of inflation and purchasing power of the salaried individual, it is expected from this budget to increase the limit of the standard deduction from Rs. 50,000 to Rs. 1,00,000.

Archit Gupt is also hopeful that Budget 2022 may introduce tax-free work from home allowances for salaried employees. Allowing deductions for such expenses will raise the take-home salary, ultimately creating demand for goods and services in the country. “Due to the high direct tax collection this fiscal year, there may be a scope to increase tax deduction limits. For instance, the standard deduction available to those with salary income may be raised, currently at Rs.50,000. This may be adjusted for inflation every year,” he said.

No tax rate change expected?

Amid all the big expectations from Budget 2022, experts at EY are of the view that corporate and personal tax rates will not be changed this year. “Corporate tax and personal tax rates likely to be unchanged. Standard customs duty rate may remain the same. There may be some movement in duty rates to incentivise value addition in India and correct inverted duty structure,” EY said.

Source: https://www.financialexpress.com/budget/income-tax-slab-rates-changes-expected-in-union-budget-2022/2414033/