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4 Reasons for not expecting Tax benefits in Budget 2022
We feel, Taxpayers' expectations of some relief from Covid-19 in form of tax benefits from Budget 2022 can not be fulfilled for the following 4 reasons. This Budget will not put more money in common taxpayers' hands due to these reasons. Comment and tell us what do you think about it.
1. National priorities
Though tax collections have been great, the Government has to look after national priorities. These include continued provision of food grains and other benefits to the COVID-impacted population, MNREGA scheme, protection for MSMES, fiscal stimulus to the economy, increase in consumption through the full circle of increased capital expenditure.
2. Fiscal Deficit
Government don't want a fiscal deficit as has been the case year on year in the past decade. The government needs a buffer for the uncertain future as there is no definitive date on the expiry of this coronavirus pandemic. The fiscal deficit for eight months ending November stood at 6.96 trillion rupees ($93.7 billion).
3. Covid-19 not over
The issues related to the pandemic continues to affect the economy and it is yet unknown what will be the additional fiscal impact of COVID-19. New threat of omicron has resulted in fresh round of lockdowns recently. India on Tuesday reported 2.38 lakh new Covid-19 cases, while the active cases rose to 17,36,628 according to the Union health ministry data.
4. Concessional Tax Rates scheme
Analysis of Data is still awaited to evaluate the success of CTR as the last date of filing income tax returns (ITR) for individuals and HUF was December 31, 2021. In order to push for greater offtake of the concessional tax regime it is unlikely that the Finance Minister would make any change in tax rates or any additional tax deductions under the existing/old tax regime as that would make CTR a non-starter.
Concessional tax regime offers lower tax rates as compared to the old tax regime, by opting for the new regime the taxpayer will have to forgo most tax deductions and exemptions that are available under the existing regime.
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