Do Not Call
Table of Contents
The category of people that has been hit adversely at least financially, by the pandemic, is the salaried sector of India’s 1.3 billion-strong population. Employees have been struck in the worst possible way. If there weren’t outright job losses, there were certainly pay cuts, not to mention the apprehension of the loss of employment looming large.
A work-from-home culture took shape, and salaried employees right from your help at home to working corporate professionals faced the brunt of financial loss of some kind or another. Besides the threat of no work, salaried individuals also had to think about protection from COVID-19 itself, and health emergency costs were ever-present. Additionally, costs of turning home into an office space shot up.
With the experiences that salaried employees have had during the past two years, individuals expected that the Indian government would provide them with the much-needed relief in terms of employee allowances and tax slab increases that they believed they rightly deserved. To be precise, a ‘Work-from-Home Allowance’ and some relief in tax over expenses incurred due to working from residences was the expectation of the salaried class. After viewing how other nations handled the granting of allowances to employees, salaried Indians believed that the Indian government had something similar in store for them. For instance, in the United Kingdom, a flat amount of GBP 6 per week was granted to salaried individuals for any additional household costs incurred.
Before the Budget 2022 was announced by Finance Minister Nirmala Sitharaman, many experts gave views and recommendations that they hoped the Indian government would pay heed to. Even to this day, after the opening up of office spaces, there are situations in which employees are still working from their residences across the length and breadth of industries and businesses. Such employees, large in number, have to incur supplemental expenses while working from homes, such as rent, electricity, internet charges, furniture, and more. Thus, employers require funds to offer allowances to fulfil the needs of the expenses that salaried folks have to deal with. In light of all this, analysts from companies like Deloitte and the Institute of Chartered Accountants Association of India, or ICAI, recommended an allowance for working from ‘home’ in terms of Rs. 50,000 granted to employees, plus relief in the form of income-tax deductions on specific ‘work-from-home’ expenses. Furthermore, although this has no bearing on the budget proposals directly, the ICAI also stated that employers should make available the work-from-home infrastructure. These tax exemptions could come as work-related perks.
In the gamut of suggestions made to the Government of India, it was also advised that the limit of Standard Deduction within the purview of Section 16 of the Indian Income Tax Act should increase from Rs. 50,000 to Rs. 1 lakh. The Standard Deduction is offered so that several expenses during the course of an employee’s work are covered. This is separate from professional tax charged on employment. In the course of their employment, employees have to incur several expenses that cannot be claimed according to the rules of standard deductions. There are expenses for the upgradation of skill, the rendering of employee services, etc, the deductions for which must be dealt with on a yearly basis. To avoid the loss of any revenue, it was further suggested that such deductions might be connected to the ‘cost inflation index’ as it occurs for income within the category of capital gains, the maximum of which may be limited to Rs. 1 lakh. This, according to experts, would go a long way to ease the burden of tax on employees, considering the rate of inflation and the purchase power of employees earning salaries.
What was expected for salaried individuals and what was ultimately the result of Budget 2022, were two entirely different things. The Budget 2022 proved to be a disappointment for the salaried workforce of the nation who had, by all accounts, lost out during the pandemic. The Indian salaried segment has faced disappointment because the existing tax structure for the salaried employee remains the same with no real relief. The government has justified this by stating that it aims for a stable tax regime for the future.
Academy by Bajaj Markets
12011
Navigate the tax maze with ease! Uncover Income Tax 101, demystify jargon with Terms for Beginners, and choose between Old or New Regimes.
7917
Unlock the world of credit! From picking the perfect card to savvy loan management, navigate wisely.
1890
Money Management and Financial Planning covers personal finance basics, setting goals, budgeting...
2493
Explore the investment cosmos! From beginner's guides to sharp-witted strategies, explore India's treasure trove of options.
225
Discover essential insights on various types of insurance in India.
1412
Welcome to Tech in Finance, where we explore the exciting intersection of technology and finance...
