Budget 2022: Five areas for some relief to households

High inflation and declining incomes due to the pandemic have stressed households. As offices and schools open once the Omicron wave subsides, rising fuel and utility costs will further erode purchasing power. Households need some relief.
Here are some areas where this is possible.

1. Basic exemption limit

Last revised in 2014-15

Rs 2.5 lakh All individual taxpayers

Rs 3 lakh Individuals 60-80 years old

Rs 5 lakh Individuals over 80

Raising this limit will provide relief and reduce the burden of filing tax returns in the system.

2. REVISION OF INCOME TAX PLATES

The highest income rate starts at a low Rs 10 lakh

Case of adjustment in view of high inflation

The new regime can be made more attractive to encourage migration

3. INCENTIVES FOR FINANCIAL SAVINGS

The Section 80C limit has not been reviewed for many years and includes non-savings items such as tuition fees and home loan principal repayments

Current limit Rs 1.5 lakh

There is room to increase given the steady decline in the savings rate

4. INTEREST DISCOUNT ON HOUSING LOANS

Not reviewed for many years even as average home prices have risen

Interest repayment Rs 2 lakh

Principal repayment Rs 1.5 lakh (included in 80C limit of Rs 1.5 lakh)

Industry wants interest relief limit raised to Rs 5 lakh

5. NORMAL DEDUCTION

Reintroduced in FY19 and integrated transport allowance and medical reimbursement

FY19 Rs 40,000

FY20 (interim) Rs 50,000

A case of increase given the higher cost of transportation and medication, apart from increased expenses due to working from home


OTHER CONSIDERATIONS

Section 80D reimbursement for health insurance. Current limit Rs 25,000. The case for an increase as premiums soared with Covid GST on insurance at 18% is high; a 5% lower tax can reduce costs and increase penetration