Budget 2022: Five areas for some relief to households

High inflation and income declines due to the pandemic have stressed households. As offices and schools open once the Omicron wave abates, higher fuel and services costs will further erode purchasing power. There is a case for some relief to households. Here are some areas in which this is possible.

1. Basic exemption limit
Last revised in 2014-15
Rs 2.5 lakh All individual taxpayers

Rs 3 lakh Individuals of 60-80 years
Rs 5 lakh Individuals over 80 years of age

Increasing this limit will provide relief as well as reduce the burden of income tax returns filing on the system.

2. REVISION IN INCOME TAX SLABS
The highest income rate kicks in at a low Rs 10 lakh

Case for adjustment given the high inflation
The new regime can be made more attractive to encourage migration

3. INCENTIVES FOR FINANCIAL SAVINGS
Section 80C limit not revised for many years and includes nonsavings items such as tuition fees and housing loan principal repayments
Rs 1.5 lakh current limit
There is a case for increase given the steady decline in the savings rate

4.INTEREST REBATE ON HOME LOANS
Not revised for many years even as average house 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 the interest exemption limit to be raised to Rs 5 lakh

5. STANDARD DEDUCTION
Reintroduced in FY19 and subsumed transport allowance and medical reimbursement
FY19 Rs 40,000
FY20 (interim) Rs 50,000

A case for increase given higher cost of transport and medicines, apart from increased expenses due to work from home

OTHER CONSIDERATIONS
Section 80D rebate for health insurance. Current limit Rs 25,000. Case for increase as premiums have shot up with Covid GST on insurance at 18% is high; lower 5% tax can reduce cost and increase penetration