Ahead of the announcement of Union Budget 2022, eyes and ears will be the Modi government's decisions on income tax followed by other key issues including India's recovery from the COVID pandemic, healthcare sector, jobs, among others. The Union Budget 2022 comes at a time when elections of various states are knocking the doors. Therefore, Nirmala Sitharaman has the daunting task of working towards the economic growth of the country followed by a check on deficits as well. Furthermore, changes are expected in the income tax rates and tax slabs in the Union Budget 2022 which have not been changed since 2014.
So here are the key expectations from the Union Budget 2022
Income Tax & Tax Slabs
One of the key factors which the people of India often take note of is whether there are any changes in the taxation slabs or not. With income tax rate slabs not been changed since 2014, it is expected that the government will tweak it in the Union Budget 2022.
It is pertinent to mention here that the basic personal tax exemption which was last revised in 2014 had raised the income tax exemption limit from Rs 2 lakh to 2.5 lakh while for senior citizens, it was increased from Rs 2.5 lakh to Rs 3 lakh. However this year, it has been estimated that the expected relief can now be increased from Rs 2.5 to 3 lakh and for senior citizens from Rs 3 lakh to Rs 3.5 lakh. Along with that, the income tax slab is also likely to be revised from the existing 15 lakhs.
Cryptocurrency in India
The government of India has already clarified its stance on the regulation of cryptocurrencies in India. Ahead of the Union Budget 2022, Principal Economic Adviser Sanjeev Sanyal said on Monday had stated that the government will take a balanced view on the issue of regulation of cryptocurrencies as they have implications on the country's financial stability. However, in the Economic Survey 2021-22, the government did not specifically mention cryptocurrencies. However, a specialised regime for imposing taxation on cryptocurrency is also expected in the Union Budget 2022 with a variety of digital assets like non-fungible tokens, wrapped asset tokens, and others gaining a huge boost in the market.
Push to private sectors
The central government can also allow allocations for the expansion of the PLI schemes for various sectors including leather and laminates in the Union Budget 2022. It is likely that the government will push the private sectors to spend more interest on capital expenditures for a multiplier effect on recovering the economy.
To promote local manufacturing in various sectors including electrical vehicles, green energy semiconductor manufacturing, and ethanol blending programs, the government can announce incentives on it. The incentives on these sectors will eye to push India combat climate changes and help fulfill PM Modi's promise and aim to achieve zero carbon emission by 2070.
Salary hike of government employees
The fitment factor is also likely to be a part of Budget 2022 which will help in increasing the salary of central government employees which was last raised in 2016. Furthermore, an increase in the employees' basic pay will result in an increase in the dearness allowance. It is pertinent to mention here that Fitment factor is a multiplication number that is used to arrive at a common result. The 7th Pay Commission multiplies this figure with the basic pay in 6th CPC regime (Pay in Pay band added with Grade pay) for the purpose of determining basic pay in revised pay structure.