Union budget 2022 is likely to present on 1 February this year is the fourth budget of Finance Minister Nirmala Sitharaman. The expectation of the country’s taxpayers are very high as no major benefits related to income tax were announced last year. Industries have appealed to the government to provide some relief to taxpayers.
Taxpayers are expecting relief such as a reduction in tax rate/increase in rebates and an increase in the limit of various deductions from Nirmala Sitharaman’s fourth union budget 2022. It has come to light that the government is holding discussions to increase the standard deduction limit from the existing Rs 50,000.
On the other hand, in the union budget 2022, the government will balance the fiscal deficit by considering expenditure incurred during the covid-19 pandemic. The government can give relief to taxpayers by rationalizing tax provisions discussed below.
Taxability on withdrawal from Provident Fund (PF), National Pension Scheme (NPS), and Superannuation Fund
W.e.f. 1 April 2020, employer contributions into Provident Fund, National Pension Scheme, and Superannuation Fund over 7.5 Lakhs in a financial year were made taxable in the hands of employees as income.
As per rules, the partial withdrawal of the National Pension Scheme balance, employer Provident Fund contributions (when withdrawn before 5 years of continuous service), and employer SAF contributions (in certain circumstances) are taxable. A fundamental principle of taxation is that an income cannot be taxed twice. The government should make such a policy that obviates double taxation on contributions.
For revision of the tax return should be restored to one year from the end of the relevant assessment year.
With the help of automation of tax processes and faceless assessment, the income tax department is completing assessments faster than earlier. On account of such a faster assessment, it had reduced the timeline for filing a revised return.
According to section 139(5) of the Income Tax 1961, a person who furnished his return of income and later on discovers some errors, then such person can file a revised return within the prescribed time limit. With the reduced time frame between the original tax return filing due date and revised return filing due date, the chances of identification of errors practically may be lower. The reduced timeline for revision of tax return filing has a big impact on those taxpayers who claim a foreign tax credit.
Therefore, the due date for the revision of tax returns should be restored to one year from the end of the relevant assessment year, which will allow taxpayers sufficient time to revise their tax returns.
Increase or decrease in excise duty, customs duty, import duty, or cess on anything.
On the increment of duties, the consumer may have to pay a higher price on products. At the same time, on reduction of duties, the consumer may have to lower price and products will become cheaper.