From same income tax slabs to higher standard deductions, here’s what to expect from Budget 2022

Feb 1, 2022 By: Rounak Jain

Income tax slabs may not change this year

Despite demands for an increase in the basic exemption limit, analysts expect the income tax slabs to remain unchanged, in large part to widen the tax base. Credit: Canva

Deductions may increase

However, the government may decide to increase deductions to put more money in the pockets of consumers, suggest analysts. Credit: Canva

Possible hike in standard deduction to help the salaried class

One of the ways to do this would be by hiking the standard deduction available to salaried individuals, from the existing ₹50,000. Credit: Canva

Incentives to buy adequate health insurance

With health at the forefront now thanks to the pandemic, the government could announce policies to increase health insurance penetration via tax incentives and lower goods and services tax (GST) rates. Credit: Canva

Formal sector’s strength keeps direct taxes buoyant

The formal sector, especially the information technology (IT) sector, has remained unscathed, helping income tax collections remain buoyant since it contributes the most to the government's direct tax kitty. Credit: Canva

Every four in five rupees of income tax comes from 2 percent tax payers

According to a report by Edelweiss, 80 percent of income tax collections come from 2 percent of taxpayers. Credit: Canva

Home loan tax deductions to incentivise home buyers

Analysts at Axis Securities expect the government to boost consumption demand by increasing the limit of home loan tax deductions. Credit: Canva

COVID-related expenses as deductions

Analysts that Business Insider spoke to said they expect the government to allow deduction of COVID-related expenses as deductions. Credit: Canva

Section 80C deductions could go up

The ₹1,50,000 limit could be increased, too, according to analysts as the government could account for inflation. Credit: Canva