Every year budget time is like dad opening the grand pitara after his trip to a distant city. All the kids in the house lining up to receive their gifts. This year too, everyone has a list of expectations. This year is also special as we now have some understanding of the pandemic hit the environment.
Companies and businesses which realised the value of work from home, and have learned to manage the workforce as such would want to continue with the trend. Employees too have some value in the trend as they can save money and time from the commute.
But it has also transferred the expenses usually incurred at the business premise to employees’ pockets. Life insurance and health insurance companies have been at the forefront of this fight against COVID. Those who suffered and lacked insurance had to bear a double brunt.
So, needless to say, insurance has been an essential financial commodity for all. While there had been multiple income tax reliefs in the past with the introduction of new slab rates, there is some scope for more.
Here are four expectations that the taxpayers will welcome in the latest 2022 budget announcements:
Retirement has been and perhaps will always be an important financial goal for individuals. However, it is unique in the fact that this goal is important not only for taxpayers but also for the government. A financially stable elderly population is better than the one dependent on social security schemes.
Budget can improve the adaptation of retirement schemes in more than one way:
a) Make minimal EPF or NPS contributions a must for all the salaried taxpayers
b) Separate the deductions on retirement savings from the rest
The limits for sections meant for retirement savings (80CCC, 80CCD) could be set apart from the section 80C limit.
80C includes multiple other long-term investments, not necessarily meant for retirement. So, this separation will put the impetus back on retirement savings. Securing the future of future retirees.
Working from home has opened new performance challenges, financial benefits and savings for businesses. While the businesses have incurred a sunk cost in establishing their infrastructure to support work from the office any day. Employees have also incurred expenses in setting up workstations at home.
Although, this may continue in the future as well. But for the past two years, the change has been a surprise hit for everyone. A one-time relief in the form of a higher standard deduction would give much-needed relief to this section.
While this seems like a discrepancy in the short run, it has long-term consequences. Though the reduction in slab rates will remain a consistent demand over the years, the rates should remain at par across the table.
Also, lower slab rates will encourage more individuals to file their tax returns, a number that is already growing.
Goods and Services Tax rates on certain services have been substantially high. Even though most of these services are not premium and few are even essential. GST rates on essential investments such as life and health insurance should be at par with the essential commodities, i.e., 5-7%.
While many other services such as laundry, certain processed goods like raisins and nuts can also use lower GST rates.
Lower GST on financial instruments like life and health insurance will make them more affordable for a larger population. Both are necessary investments for the financial protection of family units and earning members in the family.