Budget 2022: make provisions to revive savings, investment and housing

There are several expectations from Budget 2022 but here is the list of expected announcements from a personal finance perspective.

The 2022 Union Budget is only a week away and taxpayers are eagerly awaiting announcements from Finance Minister Nirmala Sitharaman to boost economic sentiment. Amid the third wave of the Covid-19 pandemic and serious concerns about inflation, people are looking for a budget that can help create more jobs, lower commodity prices and improve their quality of life. life.

There are several expectations from Budget 2022 but here is the list of expected announcements from a personal finance perspective.

Raise Sec 80C limit, allow it to focus only on investments

The deduction limit under Section 80C of the Income Tax Act was last revised in 2014. In line with inflation trends and rising incomes, this limit is to be increased to at least Rs 3 lakh. In addition, 80C is currently an assortment of deductions on eligible investments, insurance, and expenses. Streamline it; allow him to focus solely on investments.

Encourage adoption of the term plan; Provide a one-time deduction for Covid

Life insurance: The government should consider allowing separate deductions for term insurance premiums of Rs 50,000. This is the best way to enable taxpayers to cover their long-term debts. Currently, 80C forces taxpayers to combine insurance and investments, resulting in suboptimal coverage and returns.

Increase the 80D limit: The pandemic has made it important for households to provide health insurance to all family members. Policy premiums have also increased during the pandemic. In this regard, deductions for non-citizens under 80D should be doubled to Rs 50,000 to enable all families to enjoy higher coverage to protect against hospitalization costs.

Single deduction: Due to Covid-related hospitalization and treatment costs which may have caused enormous financial pressure on taxpayers in 2021, it is requested to grant a special one-time deduction of Rs 1 lakh.

Lodging

Tax deductions on home loans: A new section is expected to be added to the Income Tax Act for home loan deductions up to Rs 5 lakh with no sub-limits for principal or interest. These 5 lakh will equal the total deductions under 80C, 24B and 80EEA. Greater housing finance deductions should be extended to all borrowers. Current deductions are insufficient to cover both 80C investments and home loan repayments.

Affordable and rental housing: From a real estate perspective, expanding the definition of affordable housing beyond the price cap of Rs 45 lakh in metropolitan cities will bring more houses within the affordable price, allowing more buyers to enjoy multiple benefits like GST rates below one percent with no input tax credit (ITC).

Savings

Taxation FD: Real returns on fixed and recurring deposits are currently negative due to low interest rates and high inflation. Since most Indians depend on it for guaranteed returns, taxation of interest income should be reduced, especially for the elderly. The 80 TTB limit should be doubled to Rs 1 lakh for all, not just the elderly.

Taxation of savings: The limit of 80TTA is expected to be tripled to Rs 30,000 to encourage savings and less use of cash, in line with broader government goals. Savings rates have fallen below 3% and it would be desirable to tax them less

Tax rate

Hike 30% Slab: This slab has stagnated at Rs 10 lakh since 2013. The old scheme is still used by taxpayers with home loans, school children, insurance and investment payments. To maintain the stagnant slab, it is difficult for the urban population to cope with the rising costs.

Reduce the GST on health insurance: The GST on health insurance is currently 18%. Since health insurance is purchased by direct retail customers, the GST contribution increases their cost and makes it unattractive to them. Lowering the GST will encourage people to seek higher coverage.

Keep up the good work in Fintech

To streamline and promote fintech lending innovations, the Reserve Bank of India (RBI) has taken multiple initiatives, including the recent establishment of a dedicated fintech department and the release of the Digital Lending Task Force Report. . Online digital marketplaces like BankBazaar, which partner with banks and NBFCs, already fall under RBI outsourcing guidelines. In this regard, some recommendations and comments have already been submitted via the FICCI industry forum. The fintech industry now expects the generous central bank support to continue to grow at a rapid pace as in the past and weather the economic gloom due to the ongoing pandemic.

Now that the recommendations of the task force have already been published and a dedicated fintech department is also created, it is a good time for discussions and dialogues with the fintech industry to meet certain regulatory requests. Since these are new developments, industry input needs to be incorporated and more clarity is required from the apex bank for the smooth functioning and strong growth of the fintech and digital lending markets. Once again, we thank the RBI for their continued support and initiatives to drive the growth of fintech in the country.

(The author is CEO, Bankbazaar.com)

Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest Biz news and updates.

Dorothy H. Lewis