Only a few days are left for the presentation of the budget for the next financial year (2022-23). The common man has high hopes from this budget. Actually, the corona epidemic, rising inflation and high medical expenses have worsened his condition. Finance Minister Nirmala Sitharaman can apply ointment on his pain. She will present the budget in Parliament on February 1. This will be his fourth budget. Let us know which measures in the budget will make the life of the common man easier.
reduction in income tax rates
People want a reduction in income tax rates from the Finance Minister. Right now the income tax rate (highest) in the country is even higher than the corporate tax. This imbalance needs to be removed. Individual taxpayers who fall in the highest tax slab have to pay 30 per cent tax. After including surcharge and education cess, this rate reaches up to 42.74 per cent. In comparison, the tax rate on domestic companies is only 25 per cent. This rate increases slightly after surcharge and education cess. It is expected that the Finance Minister will reduce the tax rate from 30 per cent to 25 per cent in the budget to provide relief to the individual taxpayer having income above Rs 10,00,000 lakh annually.
Increase in deduction and exemption limit
In the last few years, the cost of living of the people has increased rapidly. This is because of the increase in essential expenses including tuition fees, medical expenses, rental expenses. Finance Minister Nirmala Sitharaman can take the following measures to give relief to the middle class. This will also help in increasing the demand in the economy. People will also get a chance to increase their savings.
1. Increase the limit of deduction under section 80C of the Income Tax Act, 1961 to Rs 2,50,000 per annum. At present, the annual deduction limit under this section is Rs 1.5 lakh.
2. Increase the limit of deduction on interest to be paid on home loan to Rs 2,50,000. At present, there is a deduction limit of Rs 2,00,000 per annum on interest on home loan for self-sustaining home.
3. The Finance Minister can give relief to the owners giving houses on rent in this difficult time. The standard deduction for them may be increased from 30 per cent to 40 per cent.
4. The corona epidemic has increased the medical expenses of the people. Therefore, there is a need to increase the deduction limit on premium for self and family mediclaim policies from Rs 25,000 to Rs 50,000 under Section 80D of the Income Tax Act, 1961. For the elderly, it would be right to increase it from 50 thousand to 75 thousand.
5. There is also a need to bring bank fixed deposits, post office and other such schemes under the ambit of tax exemption on interest on the money deposited in the savings account. At present, tax exemption is available on interest up to Rs 10,000 per annum under Section 80TTA of the Income Tax Act. It also needs to be increased to Rs 50,000.
Deduction for employees with work from home
A large number of employees have been working from home since the start of the Corona pandemic. Due to this their expenditure on things like electricity, internet, furniture has increased. Many companies are giving reimbursement and allowances to their employees in view of such expenses. The government should announce an additional deduction of Rs 50,000 annually for such employees in the budget.
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