Budget 2022 : Plan to increase 'Standard Deduction'

Considering these household expenses, can the salaried class expect their tax cuts in the upcoming 2022 budget? What clearly needs to be seen is whether this should be in addition to the existing standard deduction, which was reintroduced in 2018. It was considered effective from the financial year 2018-19.

Standard deduction is available only to employees who opt for the old tax regime. Further, at the time of re-implementation of this standard deduction, the exemptions available to the employees for medical reimbursement, conveyance allowance, etc., were withdrawn. Clearly the intention was to replace it with the standard deduction. At the same time, reducing paperwork with increased tax benefits to employees, and also benefits to pensioners. This is because there was no concept like home office or work from home at that time. The existing standard deduction should not be considered as the limit to cover for work from home allowance.

Budget 2022 : Plan to increase 'Standard Deduction'

Clearly this is the case with regard to introducing a new deduction for home office expenses or increasing the existing standard deduction for those working from home. Providing relief to those working from home, one-time deduction for home office expenses, minimum governance and ease of compliance for tax payers. They will not have to do the work of maintaining supporting documents.

If employees are given the opportunity to choose their place of work, it benefits all parties. The time and cost of commuting of employees is also cut. However, these come with additional challenges, and expenses, for employees. Expenses wise, employees will clearly see increased costs of increasing their internet connectivity, spending more on mobile phones, ensuring personal space at home. Apart from this, they will need to invest, or spend, some more to improve their performance. Those working from home with multiple members in the family, and online classes for children from home will have to reconcile. Also, working from home, one may need to shift to a bigger house to accommodate all of them.