With the budget day (Feb 1) almost upon us, there could be announcements of new schemes, changes to the existing ones, and other tax sops favouring both individuals and companies. Therefore expectations from this budget are aplenty.
In this blog, let’s look at what all the salaried and other individuals expect from the budget.
To encourage savings and increase the flow of money towards essential aspects such as education, the Government allows taxpayers to decrease the taxes they are liable to pay. The ‘deductions’ up to a certain limit reduce the individuals’ tax burden.
Here are the expectations around deductions from this budget:
Individuals are expecting this year’s budget (2022-23) to increase the standard deduction from the current limit of Rs 50,000. Some are specifically expecting it to be at least around Rs 75,000.
For instance, if an individual’s salary is Rs 6,50,000, the individual can deduct Rs 50,000, and Rs 6,00,000 will be the taxable income.
With the outbreak of the pandemic, work-from-home became a norm. And many individuals have to spend a lot to ensure an office-like environment at home. Individuals, particularly salaried workers, expect to claim deductions for these expenses from this year’s budget.
Since the outbreak of Covid in 2020, many have taken health insurance policies. At present, individuals and HUFs can claim deductions on health insurance up to Rs 25,000. It is Rs 50,000 for senior citizens. So they are hoping the budget will increase this limit.
One of the expectations from this budget is to increase the limit of deductions allowed under Section 80C. The last increase under this was in the FY14-15 budget. It was raised from Rs 1 lakh to Rs 1.5 lakh.
Section 80 C allows taxpayers to claim a deduction from their total income if they have invested in Public Provident Fund, ELSS funds, or any other investments that qualify for deductions under Section 80C of the Income Tax Act.
Overall, it is expected that the government will speed up the process of strategic disinvestment and PSU privatization. This along with the additional push for the ‘Make in India’ initiative through incentives and subsidies across different sectors is expected.
Asset monetization, higher disinvestment, and Production Linked Incentive (PLI) schemes are also likely to be important factors to look out for in the budget.
Let’s have a look at what different sectors are expecting from this budget:
In order to speed up the construction of highways and expressways, a higher allocation to the Ministry of Road Transport & Highways is expected. Additionally, ease in land acquisitions, environment and other clearances and smooth financing is key to achieving the National Infrastructure Pipeline targets.
The budget is likely to continue its focus on increasing affordable and rental housing projects. It is likely to unveil programs to provide liquidity to stuck and unsold real estate projects.
Following the pandemic’s effects, a raise in public investment in healthcare infrastructure would be a welcome move.
Travel, hotels, and other service sector businesses have been severely hit due to the pandemic. It is expected that the budget will focus on this sector with the aim of reducing their financial stress.
Further, for the aviation sector, a reduction in import duty on aviation turbine fuel and reduction in charges such as landing charges and parking charges may be discussed in the budget.
The primary focus of the auto sector this time will be to see how the budget aims at accelerating the adoption of EVs in India.
The EV charging infrastructure segment too is expected to receive a boost. With companies such as Tesla expressing interest and the bottlenecks for investments, a reduction in import duty on fully built EV units may also be included in the budget.
Schemes around the domestic production of important parts such as semiconductors may also be a factor to look out for.
The government is expected to continue on its privatization targets and a clarity on the roadmap of the privatization of PSU banks will be a welcome addition to the budget.
Following WHO’s guidelines to raise taxes on cigarettes, the budget may increase excise duty on cigarettes and tobacco products.
The education sector saw a reduction of 6% in the annual allocated spending in the previous budget. This time, many in the sector expect the budget to increase the allocation.
Clarity and regulations on online education platforms is also expected.
To provide a push to green and sustainable energy, incentives for the expansion of gas infrastructure will be an expected addition to the budget.
The startup industry has witnessed significant growth over recent years.
Many in the industry are now expecting a further push through means of ease of business, tax incentives, reduced compliance cost and other related factors.
The announcement of ‘National Startup Day’ is a welcome move for the startup community. The sector expects to be an important factor to look out for in the budget.