The countdown to Union Budget 2022 has begun. Finance Minister Nirmala Sitharaman will current the annual price range on February 1. Salaried people are ready with bated breath to price range bulletins to know if there will probably be coverage modifications that may assist them save extra. The price range for the monetary 12 months 2022-23 can be introduced within the backdrop of the Covid-19 pandemic that has impacted the economic system whereas accelerating the inflation price.
Given the growing inflation, I hope the federal government will contemplate these tax reduction measures within the upcoming price range.
Hike the 80C exemption restrict
Section 80C of the Income Tax Act is without doubt one of the hottest tax saving choices for a lot of, particularly salaried people because it permits exemptions as much as Rs 1.5 lakh. This price range can contemplate growing this restrict as much as Rs 3 lakh to assist individuals save and make investments extra amidst inflationary pressures and an increase in incomes. Additionally, the federal government could contemplate bringing in additional funding devices into Section 80C’s ambit. Currently, Section 80C is used for claiming advantages for residence mortgage repayments, insurance coverage, and different certified investments. The Income Tax Act was final revised eight years in the past in 2014 and so this can be an opportune time for the federal government to revisit it and make it extra people-friendly.
New part for Home Loan Tax Deduction
The authorities ought to contemplate a much bigger quantity for residence mortgage deductions for homebuyers. A house mortgage is without doubt one of the most handy methods to meet the home-owning dream. But it’s a huge expense that must be serviced for a very long time. Currently, residence mortgage debtors can avail of tax advantages for an quantity as much as Rs 1.5 lakh below Section 80C and Rs 2 lakh below 24B. To present extra money of their arms, the federal government could add a brand new part to the Income Tax regulation that may present deductions of as much as Rs 5 lakh with no sub-limits for principal or curiosity. This 5 lakh will equal the full of deductions below 80C, 24B, and 80EEA.
Sops that may encourage individuals to purchase Term Insurance
The Covid-19 pandemic dropped at the forefront the necessity to have sturdy well being and time period insurance coverage protection. Buying a time period insurance coverage plan is without doubt one of the most cost-effective and greatest methods to guard your loved ones in opposition to life dangers. It is a precedence that ought to by no means be ignored, particularly by people who’ve dependents and different monetary liabilities. Despite being such an vital monetary instrument, time period insurance coverage penetration stays very low. To encourage individuals to purchase such an vital coverage, the federal government can contemplate having a separate deduction for time period insurance coverage premiums for an quantity as much as Rs 50,000. Such tax incentives could encourage individuals to purchase extra time period insurance coverage merchandise.
Increase tax exemption restrict for Health Insurance below Section 80D
Health insurance coverage calls for particular consideration within the aftermath of the continuing Covid-19 pandemic. Buying an enough medical health insurance plan helps individuals cope with sudden medical bills. With medical prices going up, it turns into extraordinarily vital for individuals to purchase well being plans that present the utmost protection advantages.
With the medical health insurance premium costs going up, the federal government could relook on the present tax incentives and improve them in order that extra individuals should buy ample medical health insurance protection. As per Section 80D of the Income-tax Act, 1961, tax exemption might be availed for the premium paid as much as Rs 25,000 for people below 60 and as much as Rs 50,000 for these aged above that. Looking on the pandemic, if a household opts for a much bigger protection, the premium could stretch past the exemption threshold restrict. To encourage individuals to purchase enough protection, it is vital that the federal government hikes the exemption restrict quantity.
Covid-related remedy and hospitalisation have been financially draining for a lot of. To present reduction to such individuals, the federal government can consider offering a particular one-time deduction of Rs 1 lakh.
Additionally, I request the federal government to relook on the present 18 per cent GST price on medical health insurance. The addition of GST will increase their value and makes it unattractive for them. Reducing GST will assist individuals to go for larger protection.
Increase deductions restrict below Section 80TTA
Interest earned on fastened deposits and recurring deposits by individuals above the age of 60 or non-senior residents are taxed as per the relevant tax slab. However, senior residents can avail of tax deductions for curiosity earned as much as Rs 50,000 in a monetary 12 months below Section 80TTB. The authorities could contemplate growing the 80TTA restrict (relevant to individuals under 60 years) to Rs 30,000 to encourage financial savings as a substitute of stashing money at their properties. To perceive their FD returns vis-a-vis inflation, the federal government ought to permit the advantage of calculating the inflation-adjusted return on FDs to calculate the tax, i.e., tax to be charged after lowering the inflation from the curiosity earned.
If carried out, the above-suggested concepts will usher in reduction for the taxpayers and assist them sail via these robust instances when liquidity circulation stays difficult.
The creator is the CEO at BankBazaar.com. Views expressed are that of the creator.
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