As the budget 2022 is around the corner, tax experts suggest Finance Ministry should consider tax relief measures for salaried employees who work from home owing to increased employment related-costs.
Deloitte India, in its Pre-Budget Expectations 2022, recommended an additional ‘work from home’ standard deduction of Rs 50,0000 for salaried employees.
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Why standard deduction may be increased
The demand for a higher standard deduction limit comes at a time when household expenses have gone up as a result of inflation.
Taxpayers have seen a sharp jump in expenses related to electricity, work from home furniture, internet, additional medical expenses, and more.
Many experts agree that the government should look at increasing at least 30-35% standard deduction limit due to rising inflation and increased expenses due to Covid-19.
However, the standard deduction limit will only be applicable to eligible taxpayers who opt for the old income tax structure. The limit is not applicable in the case of the new tax regime.
What is standard deduction?
As the name suggests, standard deduction allows deducting a certain amount from the gross salary such that the total taxable income comes down.
At present, Rs 50,000 standard deduction is allowed to these categories of taxpayers.
A standard deduction of Rs 40,000 was introduced in 2018 and was later enhanced to Rs 50,000 by Piyush Goyal in the interim budget in 2019.