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Budget Insights

Budget 2022 Highlights - Lower Tax Rates

Sajhyadri C Posted on September 10, 2025

Table of Content

Introduction

Before the budget announcement, the taxpayers had high expectations of substantial change in the income tax slabs and the corresponding tax rates. As the economy is recovering from the Covid-19 crisis, this tax relief would help people enhance their net disposable income. The latest Economic Survey 2021-22 presented in the Parliament further raised the hope for more significant tax benefits for the taxpayers of all income groups, comprising senior citizens, pensioners, salaried individuals, and NRIs.

However, putting a full stop to all these expectations, the Finance Minister (FM) did not declare any change in the tax slabs or tax rates in the Union Budget 2022-23. Therefore, with this announcement of no change in the income tax slabs and rates, the taxpayers will continue adhering to the same tax rates corresponding to the tax regime they had chosen for in FY 2022-23. Furthermore, FM Nirmala Sitharaman announced that a tax deduction of up to 14% on employer's contribution would be allowed for state government employees.

Comparison of old and new tax regimes:

As per the announcement of the Union Budget 2020 from 1st April 2020, an individual taxpayer has the option to continue with the old tax regime or migrate to the new one. Under the old tax regime, the taxpayer avails tax exemptions enumerated under section 80D, section 80C, HRA, leave travel concessions, etc. Suppose he chooses the new tax regime; he forgoes around 70 deductions/tax exemptions. The advantage of the new tax regime is that the tax rates are lower compared to the old tax regime.

A critical analysis shows that under both the tax regimes, a tax rebate amounting to Rs 12,500 is available under section 87A to the individual taxpayer as per the norms of the Income Tax Act, 1961. Furthermore, it's noteworthy that as per the old income tax regime, the individual taxpayer's basic tax exemption limit varied with their residential status and age. In contrast, the guidelines of the new tax regime highlight the basic tax exemption limit of up to Rs 2.5 lakh in the said financial year.

Extended period to file income tax:

India is a developing nation, and its economy is in a growing phase. The present economic growth is gradually picking up speed; this is evident from the number of financial transactions undertaken by the citizens. The Income Tax Department has crafted a robust framework to report and monitor these financial transactions and the mismatches between the income and the tax submitted. After filing the tax some citizens might realise that they have committed mistakes in estimating their taxable income. To simplify this process of correction, the Finance Minister announced a provision in the budget 2022 to allow the taxpayers to register updated returns if they have paid additional tax. The validity of this updated return system has been announced up to two years after the relevant assessment year ends.

Hi! I’m Sajhyadri C

Financial Content Specialist

Always ready to dive into new ideas and topics, Sajhyadri is a storyteller from Kolkata, the City of Joy. He enjoys weaving narratives that make finance feel less intimidating and more inspiring. As a financial content writer, he uses the power of the pen to craft insightful blogs, compelling video scripts, and marketing copies that catch the eye. Off duty, he’s either checking out the latest web series, listing out new eateries, or debating whether his favourite football team will finally have a better season!