Budget 2022 disappoints, no income tax relief to the middle class: Here's what FM Sitharaman gave instead

Changes in the income tax slabs, changes in the income tax rates, hike in standard deduction, hike in basic exemption limit, section 80C limit, work from home tax benefits — these were the many expectations the common man had from Budget 2022. All of these did not find any mention in the finance minister’s Budget 2022 speech, leaving the individual taxpayer disappointed.

Many people were disappointed by this budget since there was nothing in it that would aid the average person who is drowning in debt, paying a high premium, and worried about their children's education.

The word ‘middle class’ was in fact trending on Twitter.





This is a list of expectations that were not fulfilled in the current budget.

Hike in 80C limit: The expense of living has skyrocketed, increased by the pandemic's detrimental effects. As a result, the present Rs 1.5 lakh cap was asked to be reconsidered, with a minimum increase to Rs 2.5 lakh in Budget 2022.

Hike tax exemption limit for health insurance under Section 80D: The current tax incentives do not encourage people to get enough health insurance. So this budget it was expected to be raised, ideally doubled. As this will encourage more people to purchase health insurance and ensure that they purchase the appropriate level of coverage.

Increased benefits for homebuyers: Demand-side policies such as tax reductions and incentives for homebuyers would only strengthen the real estate sector's fundamentals. So, it was expected to be a time-limited GST exemption for under-construction properties providing more options to potential homebuyers while maintaining taxation on par with completed projects.

Employees who work from home are eligible for tax savings: The current standard deduction should not be interpreted as a cap on the amount of money that can be deducted from a work allowance. Tax experts said that there is a strong case to be made for either establishing a new deduction for home office expenditures or raising the standard deduction limit for those who work from home.

Increased standard deduction and tax assistance for saving for children's education: Given the ongoing cost of inflation over time and current living expenses of paid workers, the amount of the standard deduction is fairly low. As a result, this amount was expected to be increased in Budget 2022.

Extend LTA cash voucher scheme due to continuing COVID-19: Due to travel restrictions imposed as a result of the Covid-19 outbreak, many were unable to travel. As a result, in the Financial Year (FY) 2020-21, taxpayers will be unable to claim an income tax exemption in this regard. So this date was expected to be extended.

Here is a look at what was announced instead.

NPS tax sop for state govt staff hiked: Employees of the state governments will be able to claim a tax benefit of 14% on the NPS contribution made by their employer, i.e., state government from FY 2022-23 onwards. Currently, only central government employees are eligible to claim tax benefit of 14% for the employer’s contribution to the NPS account of an employee. In case of private sector employees, the tax benefit is limited to 10%.

Budget 2022 levies 30% tax and TDS on crypto assets: The government has proposed that transfer of any virtual/cryptocurrency asset will be taxed at 30%. No deduction except cost of acquisition will be allowed and no loss in transaction will be allowed to be carried forward, the finance minister announced in Budget 2022 today. TDS will be imposed on payments for the transfer of crypto assets at a rate of 1% for transactions over a certain threshold. Furthermore, gifts of crypto assets will be taxed in the recipient's hands.

Tax payers can update returns within 2 yrs of AY: Taxpayers will be given more time to update their income tax returns (ITR), announced FM Nirmala Sitharaman during her Budget 2022 speech. As per the announcement, “I am proposing to file an updated return on payment of additional tax for two years from the end of the relevant assessment years.” This would mean that individual taxpayers will get more time to file their updated income tax returns in case he/she has missed declaring the income at the time of filing income tax return.