The union budget is essentially a document that sets out the government’s estimated expenses and receipts for the upcoming financial year. At first glance, it may appear that the budget only impacts the country’s policies, finances and the macroeconomic aspects in India. After all, it is the government’s projected annual receipt and expenses statement, isn’t it? Surely that has nothing to do with you?
The truth, however, is that the budget can - and will - be more intricately connected to your personal finances than you expect. Certain policies and projects may have a direct effect on your financial plan, while others may indirectly affect how you would need to budget your money in the coming financial year.
To give you more clarity on this subject, let’s take a closer look at the various ways in which Budget 2022 may be connected to your finances.
1. Direct taxation
This is one the primary areas on your finances that Budget 2022 could have an impact on. Every year, the union budget contains key proposals related to individual income tax. This could impact how your income is taxed and how much of your investments and expenses are eligible for tax deduction. More particularly, here are some things expected from Budget 2022 that may have an effect on your direct taxes.
Budget 2022 is also expected to include a number of proposals and measures related to the many investment options in the country. So, depending on the policies suggested, some investment options may be more or less attractive than they are now. And this, in turn, could affect how you invest your money - which is a major part of personal finance management. So, here are some Budget 2022 expectations that may impact your investments.
Insurance is another vital area of personal finance. And interestingly, it is also a key area in the union budget. Putting two and two together, you can no doubt appreciate that any budget propositions related to any kind of insurance is of great significance to your finances. So, let’s take a closer look at the Budget 2022 expectation in this area.
Life insurers have requested that a separate tax bucket be created for tax benefits on premiums. This can help life insurance policyholders to fully enjoy the tax advantage of their life covers. So, say the government accepts this proposal, and say you have invested Rs. 2 lakhs in PPF and pay Rs. 1 lakh as life insurance premium annually. In that case, you can claim Rs. 1.5 lakhs as tax benefits under section 80C for your PPF investments, and Rs. 1 lakh as deduction under the new tax bracket for your insurance premiums.
4. Indirect taxation
Indirect taxes like Goods and Services Tax (GST) and import duties may not directly affect your finances. But they play a major role in determining the cost of products and services in the country. In other words, they affect the general cost of living. So, any changes to the tax rates in this area may make the related products or services either more expensive or more affordable. And needless to say, your personal finances need to be adjusted accordingly to account for these changes.
Let’s take a closer look at some indirect tax expectations associated with the budget for FY 2022-23.
This should give you a fair idea of how the union budget 2022 is connected to your personal financial plan. So, make sure that you tune into the budget speech on February 1, 2022 to get a firsthand account of what this year’s budget includes. And if you cannot do that, worry not, because we’ll give you timely updates on the same.