Forbes India – Covid-19, Medical Insurance: Budget 2022: What salaried Indians expect from Nirmala Sitharaman
With a new year comes new resolutions and high expectations, but also a new budget that India’s working class dreads but also hopes for, especially this year.
The past year has been particularly tough for the working class who have been walking a tightrope with rising spending on the one hand and falling income levels on the other. The reduction in income is the result of moderate increases and incentives, lower interest rates, and dramatically high medical costs.
Given this scenario, the expectations of the salaried class from the 2022 budget to be announced on February 1 are as follows:
Introduction of a deduction for work at home
Due to the ongoing pandemic, most employees have been working from home for two years. They have incurred significant expenses to set up home offices so that they can deliver efficient work. They incurred expenses for furniture, computer peripherals, broadband, telephone, electricity and more.
Although some of these expenses are reimbursed by employers, there may be specified thresholds, beyond which these costs fall on the employee. Currently, there is no specific provision in the tax laws that exempts such refunds. There is also no provision for employees to claim a deduction for such costs incurred by them. A deduction for this work from household expenses would greatly contribute to lightening the burden on employees.
Increase in the health insurance threshold
Last year also saw an increase in spending on medical costs. This may be for the treatment of Covid-19 and other illnesses, or may simply be preventive health care in the form of masks, disinfectants, vitamin injections or Covid-19 tests, and also an increase in health insurance costs. It has been observed that the insurance premium for comprehensive health coverage for individuals has increased significantly. All of these expenses have left a hole in employees’ pockets, and an increase in medical insurance limits would provide some relief.
Increase in the standard deduction ceiling
The last increase in the standard deduction was made in 2019 when the threshold was increased from Rs 40,000 to Rs 50,000. Considering the rise in inflation, we hope that the standard deduction will be increased by at least 20 to 25%.
Reintroducing benefits like the leave travel concession
In 2020-2021, the government introduced a tax exemption scheme for leave travel for employees to reduce their tax burden. The scheme was introduced in October 2020 to grant taxpayers the option of claiming a deduction for the leave travel concession even if they are not travelling, provided they spend the amount on qualifying expenses. Many employees have benefited from the scheme. If the government could consider offering such options to employees, it would give them tax relief.
Restore tax return review deadline to one year from the end of the tax year
The advancement of the tax return review schedule was hailed as an incremental measure for speedy processing of tax returns. The intention of allowing revisions was to give taxpayers more time and opportunity to correct any errors or unintentional omissions in the original return. With extended due dates for filing the original tax return, the review schedule has been even tighter. In cases where the employee is subject to tax in two jurisdictions, the filing of the revised return is unavoidable to claim a foreign tax credit for taxes paid in another country. This is due to the difference in fiscal years and tax return due dates in the two jurisdictions. However, with the shortening of the deadline for filing tax returns, taxpayers must file tax returns on an interim basis rather than on a final basis. It is therefore difficult to answer the assessment officer’s questions during an audit.
The pandemic has already impacted normal life and there is a need for the government to provide some relief to the working class.
The writer is a partner at Deloitte India.
The thoughts and opinions shared here are those of the author.
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