Budget 2022 Latest News: Exemptions and reliefs that taxpayers may get

Union Finance Minister Nirmala Sitharaman will present the Budget 2022-23 at 11 am on the customary date of February 1. The budget is expected to bring decisive policy changes and announcements to propel an economy beleaguered by the pandemic. As per the economic survey tabled in the Parliament a day before the budget, on January 31, India is on course to become the s fastest-growing major economy in the world with GDP growth of 9.2% in the current financial year. The government’s survey projects the growth to remain in the range of 8 to 8.5% in 2022-23.

The common tax payer is anticipating a slew of reforms and relief from Budget 2022. Around 5.89 crore tax payers filed returns during the assessment year 2021-22. Only 5% of these chose to utilise the new tax regime. This means that tax payers have not warmed up to the new tax regime till now. On the other hand, this year’s budget is also significant as it comes days ahead of crucial Assembly Elections in 5 states, including significant large ones in Uttar Pradesh and Punjab.

In the present situation, analysts expect the Budget to bring benefits like standard deduction and tax relief of housing loan interest, being added to the new tax regime. Here’s a list of major benefits and reliefs that may be on the horizon for tax payers in the Union Budget 2022:

Further tax exemption on principal of home loan

Budget 2022 expectations are high and tax payers are demanding separate annual deduction of up to Rs 1.5 lakh on the principal account, apart from the tax exemption on principal account on investment of Rs 1.50 lakh available under section 80C.

Extension of income tax exemption limit

With record-breaking inflation, prices of food items, edible oils and other fuels have skyrocketed. Taxpayers are expected an increase in the limit of income tax exemption above Rs 2.50 lakh.

Separate section for life insurance

Taxpayers also expect a separate section for tax deduction on life insurance premium payment. Section 80C currently covers several of the investment options including Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS) and National Savings Certificate.

Additional relief on insurance premium

A separate exemption of at least Rs 1 lakh is being demanded by industry stakeholders on the payment of insurance premium under section 80C. At present, these come under Section (80C) of Income Tax Exemption and the investment limit under 80C limit is Rs 1,50,000.

Standard deduction

The Institute of Chartered Accountants of India (ICAI) has sought relief for tax payers wherein the limit of standard deduction is increased from the currently limit under income tax of Rs 50,000, to Rs 1 lakh.