Standard Deduction in Income Tax Likely to Increase by 30-35% in Budget 2022

The government is thinking 30-35% increase in the limit of standard deduction available to salaried taxpayers and pensioner in Budget 2022, as per the officials.

“There are many suggestions on personal taxation. This year one common demand was to increase the limit of standard deduction, especially considering inflated cost of medical expenses on account of Covid-19. The proposal is to increase it by 30-35%,” a senior official from the finance ministry told ET.

In this regard, Sudhakar Sethuraman, partner at Deloitte has said that many countries have introduced tax exemptions on Covid-induced work from home expenditure, including office setting up, and expenditure on medical benefits related to the pandemic. “The government should make it a regular practice to revisit the limit of standard deduction every year,” he further added.

Further, trade bodies including Assocham and Confederation of Indian Industries (CII) in their pre-budget meetings, have sought higher standard deduction.

Currently, standard deduction of Rs 50,000 is allowed to these categories of taxpayers. Whereas, there is no standard deduction available for taxpayers who opt for the new tax regime.

With the Covid-19 pandemic increasing at-home expenses of salaried class such as electricity and communication, there have been demands for some relief to taxpayers. However, the proposal is subject to final approval, depending on the latest tax collection situation, the person said.


Knowledge Source :

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