Taxpayers expect Income Tax Relief in Budget 2022-23

Insight Bureau: Like every year, the Union Finance Minister has a tough task at hand to balance public expectations and deliver a budget that would put India back on a growth track, especially after the long disruption caused by the ongoing Covid-19 pandemic which has impacted the entire nation in more ways than one. The Union Budget 2022-23 will be presented by Finance Minister Nirmala Sitharaman on February 1.

Although significant relief measures have been taken by the government to keep the situation under control, the Union Budget for 2022-23 offers hope to citizens and taxpayers for additional relief measures to continue fighting the pandemic battle.

Direct tax proposals are an important part of the budget since the revenue from those direct tax collections contributes a significant amount to the total government’s revenue. In turn, both corporate and non-corporate taxpayers eagerly await the proposals put forth in the budget with the hope of lower taxes and more liquidity.

Owing to the unprecedented circumstances and salaried-class expectations; the upcoming budget could soften the continued blow delivered by the pandemic by way of an increased threshold for deductions, the introduction of a deduction for a work-from-home setup, and several other relief measures.

While the introduction of a new taxation regime seems to be a welcome move, the taxpayers need to forgo certain deductions and exemptions for availing of the reduced rates of taxation.

However, a large section of taxpayers is more inclined towards investment in tax-deductible schemes due to dual benefits, i.e., savings for the future and reduction in the present tax liability.

Therefore, opting for the new tax regime does not seem particularly beneficial for the said category of taxpayers.