Union Budget -2022: The Top 10 Expectation of the Taxpayers


Union Budget -2022:

The Top 10 Expectation of the Taxpayers

The final countdown for the Union Budget 2022 has begun. Though Income Tax is one of the key sources of Government revenue, taxpayers have a lot of expectation for some new tax sops. Further, industries are struggling not only with the compliances issues but also with the post covid liquidity crunch. All are also looking ahead for some mega announcement in Budget -2022. Let us have a look at what the taxpayers may expect from the coming Union Budget – 2022.
  1. Tax relief for Covid patients and their families:
    Presently, Section 80D of the Income-tax Act allows deduction up to Rs. 50,000 in respect of any expenditure incurred on the medical treatment of a senior citizen (60 years & more) provided such person is not covered under the health insurance policy. However, no such benefit is available to non-senior citizens.
    There are many citizens whose family budget got adversely affected as a result of medical expenditure during 1st & 2nd wave of covid. There are no direct tax benefits /deductions which are available to the taxpayers except for senior citizens discussed above. Government may consider giving tax reliefs / deduction against medical expenses incurred as a result of 2nd wave of the Covid which has happened post Budget -2021 and has been the part of the FY 2021-22.
  2. Scrapping of TDS U/s 194Q and TCS U/s 206C(1H) :
    Section 206C(1H) which provides for TCS on sale of goods has added an unnecessary compliance burden on the business houses. This is further enhanced by Section 194Q which provides for TDS on purchase of Goods. Both these two provisions have turned out to be the biggest deterrence to the concept of “Ease of business”. The data of purchase as well as sell can very well be extracted by the Income Tax Department from the GST returns. TDS & TCS on purchase/Sale is neither widening the tax base nor increasing the revenue. As a result, both the sections can be conveniently removed from the Income Tax Act without loss of revenue to the treasury. Hope Budget – 2022 gives the boost to the business by scrapping both this section.
  3.  Disallowance towards PF/ESIC U/s 36(1)(va) in respect of Employee contribution paid after the due date under the Respective Act:
    Union Budget – 2021 has provided for outright disallowance of the amount of employee’s shares towards PF/ESIC if it is not paid within the date under the respective Act. This amendment has enhanced the financial burden of the taxpayers despite the fact that the industries and businesses are already struggling with liquidity crunch post-Covid – 2nd Wave. There are enough penal provisions under the relevant labor law to ensure the payment within the due date. In the interest of the business, suitable amendment may be done in the Act so as to allow the deduction if the amount is paid before the date of filing an income tax return as against the due date under the respective Act.
  4. Enhanced amount of TDS & TCS for Non-Filer of Income Tax Returns U/s 206AA & 206CCA:
    The Finance Act- 2021 has provided higher TDS & TCS rates if the recipient of payment or seller is not regularly filing the income tax returns. This is done by adding new sections 206AA, 206AB & 206CCA. Now, every person is required to verify the applicability of higher TDS/TCS rate in each & every case. The process of verifying whether the person is filing the income tax return or not is a time-consuming process as it has to be backed by the OTP at the portal. This proposal needs to be withdrawn as the Income Tax Department has enough infrastructure and system to ensure compliance from the non-filers. Adding compliance requirements on the recipient of payment/ seller is increasing the workload & burden of the taxpayers.
  5. Increase in standard deduction limit to Rs. 1 Lakh:
    Presently, the salaried taxpayers are eligible for standard deduction of Rs. 50,000/-. Salaried taxpayers are still the most honest class of the taxpayers and their contribution may be recognized by suitably enhancing the limit of standard deduction to Rs. 1,00,000/-.
  6.  Increase the limit of deduction of interest on housing loan:
    At present, taxpayers are entitled to get the deduction towards interest on housing loan up to a maximum limit of Rs. 2 lakh for self occupied house property. The threshold limit of Rs. 2 Lakh was fixed long back in the year 2014 and is reasonably due for review. It may be enhanced to Rs. 3 Lakh to not only promote the real estate sector but also to motivate the middle class taxpayers for investment in the house property.
  7. Taxability of Cryptocurrencies:
    The taxation of crypto currency is still the matter of ambiguity and controversy. During the winter session of the parliament, a Bill was expected to be presented to regulate Cryptocurrencies. However, it was not introduced. Considering the volume & size of the market & increasing numbers of investors, it is expected that the Budget – 2022 may lay down the roadmap for taxation of income from investment /transaction in Cryptocurrency.
  8. Concessional tax regimes for Firm/LLPs:
    At present, there is a concessional and alternative tax regime for domestic companies, individuals, HUF and co-operative societies. However, the partnership firms and LLPs are still taxable at a flat rate of 30%. Hopefully, Budget – 2022 may introduce the similar concessional tax regimes for the firms and LLPs as well.
  9. Upward revision of Personal Income Tax Slab:
Lower tax rate results in better tax compliances and discourages tax evasions & avoidance. The personal income tax exemption limit has not yet been changed since long though the alternate tax regime for personal taxation U/s 115BAC was introduced in 2019. The time has come when the basic exemption limit, tax rate & tax slab may be revisited now & the maximum tax rate may be capped at 25% for the individual taxpayers.
  1. Recognizing the Taxpayers of the Country:
    Taxpaying population is very less as compared to the size of the country. There is no recognition & incentives to the taxpayers. With the advent of Information Technology, special incentives & privileges can be offered to taxpayers by offering priority on various fronts like railway reservation, court cases, healthcare services, etc. Hope 2022 Budget lays down the roadmap of recognizing the taxpayers of the country.
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