Unify the old and new income tax regime, make tax forms simpler

A lot of expectations from the Budget 2022 is there, experts believe that it is good time to do the course corrections




Budget 2022 is just a week away. Expectations are high from all stakeholders given the hardship people have been facing since the last two years. The upcoming budget is also expected to be a populist budget as anticipated because five states are going to have elections soon after the budget. The big question: Will the government tinker with the new income tax slabs?

Moneycontrol spoke to three income tax experts and they have identified the three most important personal taxation proposals that Budget 2022 should pick up:

Single or hybrid tax scheme

At present there are two income tax slabs to choose from for tax filers. Vivek Jalan, partner, Tax Connect Advisory Services LLP, believes that there is a need for a single or hybrid tax slabs, instead of two. Tax experts like Jalan are unanimous that there are few takers for the new income tax regime.

The new income tax slabs that came into effect from April 1, 2020 (financial year 2020-21) under section 115BAC of the Income-tax Act, 1961, doesn’t allow exemptions and deductions like house rent and leave travel allowance, education allowance, section 80C and 80D benefits and home loan interest deduction under Section 24B.

There is a clear distinction among takers of new slab and old income tax slab. The new slab is taken up by millennials who are starting their careers. Their propensity to save is less and hence the exemptions/deductions do not appeal to them. People who are settled in their careers and who already have in place a system of investments generally opt for the old slab.