Budget 2022: Govt may make new simplified personal income tax regime more attractive

The government is aiming to make new simplified personal income tax regime more attractive for the salaried class, sources informed CNBC-TV18.

Government is considering tweaking new tax regime to encourage taxpayer adoption. Also, it is expected to club standard deduction and interest against home loan, sources said.

"House rent and medical insurance premium may also be included under new tax regime. Finance Minister Nirmala Sitharaman is also expected to encourage taxpayers to shift to new direct tax scheme and give away other exemptions. Talks are even underway on more relief for individual taxpayers," sources added.

1. Hike in existing standard deduction limit

2. Increase in window for medical insurance premium

3. Simplification in capital gains tax rules

However, no final decision has been taken as of now. Direct tax proposals may get finalized after January 20.

It's important to note that out of over 6 crore taxpayers, 4 crore are below income bracket of Rs 5 lakh per annum where a rebate already exists. Budget 2022 will highlight the need for stable tax regime. It may even talk about landmark decision to settle retrospective tax cases.

Additionally, the government may look at launching a mediation window before tax demands are raised. Further, ease in tax compliance for exporters and industry is likely to be announced.