Budget 2022: What FM Sitharaman can do to make taxpayers' life easier? Clear's Archit Gupta answers

With many Indian households still struggling with the financial stress caused by the covid-19 pandemic, there are high expectations from the upcoming Union Budget 2022 to be tabled on 1 Feb. Archit Gupta, Founder and CEO, Clear, lists 5 things that FM Sitharaman should do to make the life of a taxpayer easier. Read here: 

Clarity on cryptocurrency taxation: While the government is waiting on the cryptocurrency bill, much-needed clarity is expected on its taxation in the upcoming Union Budget 2022. 

“There are various concerns about the taxation of crypto, its classification, applicable tax rates, TDS/TCS and GST implications on the sale and purchase of cryptocurrencies, etc. which we are hoping will be clarified during the budget session,” Gupta said

The new tax regime: The personal income tax slab is likely to be revised this year again. With two tax regimes still being confusing for the common man, Gupta pointed out,  “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.”

Standard deduction and work from home deduction: The Budget 2021 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.

Section 80C and Section 80D limits: There is a high expectation that limits under Section 80C and Section 80D  will certainly be raised this year. 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. Further, a special COVID expense related deduction may be allowed under Section 80D or 80DDB to provide tax relief for COVID-19 patients and their families.”