The Banking Sector Wants GST Relaxation in Budget 2022

The Banking Sector Wants GST Relaxation in Budget 2022

Expectations for the 2022 Budget: Different industries’ expectations of the government are coming to light ahead of Budget Day. It’s the same in the financial business. Finance Minister Nirmala Sitharaman, who will deliver the Union Budget 2022 on February 1, next week, has a long list of requests for the industry. The banking sector wants the government to pay attention to it during this year’s Budget session, in terms of tax relief and additional perks.

On February 1, when Sitharaman unveils the 256th Budget, it will be obvious whether the government will heed to their demands.

“With digital payments, the next focus should be on digital banking, as many of the accounts opened under the JAN DHAN YOJNA are inactive. On a larger scale, technology should assist the government in realising its goal of transforming India into a digital economy “On Budget 2022, Archana Elapavuluri, Founder of Pickright Technologies, said.

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“By diminishing the use of cash in economic transactions and ensuring people have access to improved financial services and credit, this reform is vital to improve the country’s overall economic efficiency,” she added.

The abolition of GST and TDS on financial services through business correspondents announced in the Union Budget 2022, according to Ram Shriram, founder of BharatATM, will provide seamless services.

“Gentle taxes for self-serviced digital clients has resulted in the growth and adoption of the digital payments sector,” he stated.

“To guarantee that the same benefits are available to residents who are less tech-savvy, our government could consider lowering the GST and TDS for financial inclusion services provided by Business Correspondent (BC) stores across India. The elimination of GST and TDS will assist the industry in lowering the cost of providing seamless financial services “Shriram contributed to the conversation.

Tax breaks and incentives for the banking industry are also likely, according to experts. “Incentives to the banking industry include reimbursement of specific costs or tax subsidies in the form of weighted deductions or 100% depreciation,” Divam Sharma, founder of Green Portfolio, a SEBI licenced portfolio management service provider, explained.

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The Reserve Bank of India (RBI) has established an internal fintech department to focus on the country’s rapidly changing financial sector.

Apart from GST waivers and tax exemptions, experts called for KYC regulations and an NPA perspective in the Budget, which might assist banks mitigate risks.

“To increase efficiency, the regulatory framework and implementation of electronic and video KYC onboarding of customers should be highlighted. To develop a CKYCR (Central KYC registry), a repository of consumer KYC information, technological advancements must be made “Alea Consulting’s founder and CEO, Deepak Bhawnani, stated.

“To increase efficiency, the regulatory framework and implementation of electronic and video KYC onboarding of customers should be highlighted. To develop a CKYCR (Central KYC registry), a repository of consumer KYC information, technological advancements must be made “Alea Consulting’s founder and CEO, Deepak Bhawnani, stated.

Budget 2022: Expected deductions and benefits for salaried workers

Budget 2022: Expected deductions and benefits for salaried workers

Budget 2022 is rapidly approaching. As a result of the recent increase in COVID cases in the country, there is a greater anticipation among taxpayers that relief and deductions will be provided to individuals. The following are some significant expectations.

Income tax rates are being reduced.

Individuals are currently taxed at the highest rate of 30%. Furthermore, because of the surcharge and education cess, individual tax rates might be as high as 42.744 percent, whereas domestic company tax rates are just 25%. (plus applicable surcharge and education cess).

Given the foregoing, taxpayers would welcome a reduction in the tax rate from 30% to 25% for people earning more than Rs 10,00,000 (under the current regime) and more than Rs 15,00,000 (under the proposed regime) (under the new regime).

Limits on certain deductions and exemptions are being raised.

The cost of living is fast rising, resulting in increases in children’s tuition fees, medical bills, and rental expenses, among other things. The following adjustments will improve the amount of disposable income available to middle-income households and encourage them to invest:

Increasing the deduction limit under section 80C of the Act to Rs 250,000. (from Rs 150,000).

Increase the interest paid on housing loans deduction limit for self-occupied houses from Rs 200,000 to Rs 250,000.c

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The current standard deduction of 30% should be increased to 40% to help property owners who have rented out their houses during these challenging times.

An increase in the section 80D deduction limit for self (not a senior citizen) and family from Rs 25,000 to Rs 50,000, and from Rs 50,000 to Rs 75,000 for senior people, should be considered in order to boost participation in medical plans.

Extending section 80TTA relief to FD bank interest, post office schemes, and other similar schemes for the general category, and raising the threshold from Rs 10,000 to Rs 50,000.

Currently, during the contribution stage, a deduction under section 80CCD(2) is possible to the extent of 14 percent of pay if the Central Government (CG) contributes, and 10% of salary where any other employer contributes. A deduction of 15% of salary should be provided to all employees to bring parity in the deductions allowed between employees employed by CG and those employed by other employers.

Employees who work from home are eligible for a deduction.

Many firms provide reimbursements / allowances to pay these expenses because many workers now work from home, incurring additional expenses such as internet rates, rent, power, furniture, and so on.

Employees would enjoy it if the tax authorities granted an additional deduction for the Rs 50,000 ‘Work from Home’ allowance.

In GSTR-3B, GST Portal has added a new interest calculator feature.

The deadline for filing updated India tax returns has been extended.

Previously, the due date for filing updated returns was 12 months after the end of the Indian fiscal year, but this has been reduced to 3 months. For example, the due date for filing amended India tax returns for FY 2021-22, which was previously March 31, 2023, would now be December 31, 2022.

Some people claim credit for taxes paid in other countries on the basis of their overseas tax returns. These taxpayers would be unable to get calendar year overseas tax returns for the year 2022. This will make calculating and claiming credit for taxes paid overseas for the calendar year 2022 complicated.

Accordingly, the due date for filing the revised return of income should be continued to be 12 months from the end of India tax year.

Clarification on the taxability of interest on PF contributions made by employees

A provision was included in Budget 2022 to regard the interest on an employee’s contributions to Provident Fund (PF) exceeding Rs 250,000 as taxable. The Rs 250,000 ceiling should be increased to Rs 500,000.

A clarifying clause on whether interest on employee PF contributions is taxable at the accrual stage or at the withdrawal stage is also required.

If the aforementioned proposals are followed in Budget 2022, taxpayers will undoubtedly benefit.

Expectations for Budget 2022: Increased standard deductions and income tax relief for saving for children’s education.

  • 20 Jan 2022
  • Budget
  • Comments Off on Expectations for Budget 2022: Increased standard deductions and income tax relief for saving for children’s education.

Expectations for Budget 2022: Increased standard deductions and income tax relief for saving for children’s education.

The standard deduction for salaried taxpayers was reestablished at Rs 40,000 from FY2018-19 onwards, in lieu of the elimination of tax exemptions for transportation allowance of Rs 19,200 and medical reimbursement of Rs 15,000, which were repealed in fiscal year (FY) 2005-06. From FY2019-20, the deduction ceiling was increased to Rs 50,000.

Given the annual cost of inflation and current living expenses of paid individuals, the amount of deduction is relatively low. Since the start of the Covid-19 pandemic, household spending has been negatively impacted by rising medical costs and work-from-home expenses such as furniture, power, and the Internet, among other things. As a result, the present standard deduction limit of Rs 50,000 needs to be increased to at least Rs 75,000. Individuals will be able to ride out these exceptional times with some financial cushion.

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Furthermore, many nations, including the United States, the United Kingdom, Canada, and Ireland, have implemented tax exemptions for Covid-19-related medical expenses (such as medical supplies, testing kits, and so on) as well as work-from-home expenses, such as home office setup. In India, however, no comparable deduction or exemption has yet been implemented. As a result, raising the standard deduction limit would give individuals more financial flexibility in incurring the aforementioned expenses.

Furthermore, taxpayers who choose the concessional optional regime under section 115BAC of the Income-tax Act, 1961 may be eligible for the standard deduction. For paid individuals and pensioners, the standard deduction is a deduction allowed from gross salary income. This deduction lowers the individual’s taxable salary income, lowering his or her tax burden as well.

The govt has extended the deadline for filing corporate ITRs for FY21. 15th of March, tax audit report due by February 15th

The necessity for a tax deduction for children’s higher education savings. Saving for a child’s higher education is an important financial objective for everyone, and most people set aside a percentage of their salary for this purpose. Except for the Sukanya Samriddhi Yojana, which is specifically for a girl child, there is currently no express deduction or exemption for such funds. Because the deduction is combined within the section 80C limit of Rs 1.5 lakh per year, the tax benefits are likewise minimal. Other tax-saving investments/expenditures (such as Employees’ Provident Fund, Public Provident Fund, principal repayment of a home loan, children’s tuition fee, National Funds Certificate, etc.) are covered by this deduction, leaving little room for higher education savings to be claimed.

A separate deduction of at least Rs 1.5 lakh for education funds would be a welcome gesture in this direction. To ensure that such money are not misappropriated, the account proceeds (including any interest earned) may be paid directly to educational institutes as soon as the child is accepted for higher study. Alternatively, the education expense deduction (including tuition expenses) might be separated from the section 80C deduction and recognised as a distinct item.

In a nutshell, an increase in the standard deduction and additional deduction for college expenses will encourage more long-term savings while also incentivizing individuals through tax benefits.