Since 2020, the pandemic has wreaked havoc on paid workers. Employers across the country have been compelled to ask their employees to work from home due to the rampaging pandemic. Employees were forced to not only spend more to protect themselves and their families from Covid-19, but also to incur additional costs like internet and telephone charges, furniture to set up a home office, higher electricity bills, and so on.
Employees didn't have to worry about these costs, because the office provided all necessary office supplies.
Employees Are Expecting A Work From Home Allowance In Budget 2022
In light of the foregoing, salaried employees expect the government to announce a Work From Home Allowance in the next Budget 2022, which would provide tax relief on expenses incurred while working from home during the pandemic.
The government might draw inspiration from countries like the United Kingdom, where salaried employees receive a flat rate of GBP 6 per week in tax relief for additional household costs if they have to work from home.
"Given the current situation, staff across the board are working from home. Employees are anticipated to incur additional 'work from home'-related expenses, such as internet charges, rent, power, furniture, and so on, and employers would need to pay allowances to cover these costs," according to Deloitte India's Pre-Budget Expectations 2022 report.
Employer Supplies Necessary Set-up for Employees to Carry-out Their Work
The Institute of Chartered Accountants of India (ICAI) also recommended that the government grant tax relief on work-from-home expenses in its pre-Budget memorandum. "Expenses incurred for furniture/other set-up charges may be specifically excused," the ICAI suggested.
According to the ICAI, businesses have introduced work-from-home policies as a result of the shutdown. "Because employees may not have the essential set up at home to carry out official obligations, the employer supplies the necessary set up so that employees can carry out their work quickly and effectively."
Standard Deduction of Rs 1 lakh
The government should also raise the Standard Deduction limit under Section 16 of the Income Tax Act from Rs 50,000 to Rs 1 lakh, according to certain suggestions.
Other than profession tax on employment, the Standard Deduction is available to cover a variety of costs incurred throughout the course of employment. Employees must incur a variety of expenses during the course of their job that they are unable to deduct.
According to the ICAI, a few exclusions available to them under section 10 are subject to higher limitations that were set several years ago and now serve no use due to inflation. Employees must incur numerous fees during the course of their work, including for skill upgrading and performing services as employees, according to the report, and the deduction for such charges must be increased every year.
To eliminate revenue leakage, such a deduction may be linked to the cost inflation index, exactly as it is for income under the heading capital gains, and the maximum could be limited to say Rs. 1,00,000.
"It is suggested that the standard deduction u/s 16 be increased to at least Rs. 100,000 to ease the tax burden of employees while taking into account the rate of inflation and purchasing power of salaried individuals, and rather it be linked to cost inflation index for regular enhancement in deduction amount similar to that available for income under the head capital gains," the ICAI said.
