Budget 2022 expectation of bank depositors: Given low returns from bank fixed deposits and other savings schemes, a lot of investors are lured towards risky assets these days. Experts feel that Budget 2022 should provide an incentive to bank depositors in the form of tax relief to curb this rising trend.
“Given the prevailing negative real interest rate environment and the low interest rates being offered on bank deposits and the interest on bank deposit being taxed at the applicable income slab rate with no beneficial income tax rates available like for certain other asset classes, there is an inherent incentive for people to invest in risky assets to earn higher returns,” Abhishek Saxena, Partner at Phoenix Legal, told FE Online.
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“Hence to help people avoid such risky behaviour, interest on deposits should be taxed in a similar manner as listed equity, with a lower income tax being applied for deposits held beyond one year and a higher rate applicable to deposits held for less than 1 year,” he added.
Experts also feel that the upcoming Budget should provide tax incentives to salaried individuals in the form of enhanced deductions from salary income and tax savings on schemes qualifying under Section 80C.
“One hopes that the budget will be more attractive to incentivize individual taxpayers. It is expected that the standard deduction for the salaried individuals may be increased from Rs 50,000 to Rs 75,000 to provide relief to the salaried personnel,” said Mitesh Jain, Partner, Economic Laws Practice.
“A new allowance may be introduced for salaried personnel who have been working from home during the pandemic. The budget is further expected to enhance the limit of investment deduction under Section 80C, health insurance premium deduction under Section 80D and interest on housing loan deduction since the limits have not been increased during the last 5 years,” he added.
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Paras Nath, Partner, Tax & Regulatory Services at, T R Chadha & Co LLP, said that as the country has started recouping from the third wave, there is lot many expectations from this budget.
“For individuals and salaried section, the major expectation is reduction in tax burden either by reduction in rates or increase of slab. Further, increase in standard deduction and simplification of the process of return filing by eliminating the complexity of making choice from old and new regime is also expected,” he said.
Finance Minister Nirmala Sitharaman will present Union Budget 2022 on February 1.