Budget 2022: Rs 50,000 Work From Home Allowance For Private, Govt Employees Expected!

Budget 2022: Rs 50,000 Work From Home Allowance For Private, Govt Employees Expected!
Budget 2022: Rs 50,000 Work From Home Allowance For Private, Govt Employees Expected!

COVID-19 has badly hit salaried employees since the start of the pandemic. 

It has forced employers across the world to ask their employees to Work From Home.

Pandemic Affecting Employees And Employers

The employees also had to spend extra to protect themselves and their families from Covid-19.

On top of that, they have to undertake several additional expenses like internet and telephone charges, furniture to set up a home office followed by extra electricity and internet bills etc. 

Earlier life was much simpler than this. 

Work From Home Allowance

It is but natural that salaried employees are expecting the Government to provide a Work From Home Allowance in the upcoming Budget 2022.

The main goal behind this regime is to get tax relief on expenses incurred for carrying out office work from home during the pandemic.

And why not, as it has already been implemented in countries like the UK.

The UK has a flat rate of GBP 6 per week of tax relief for additional household costs for the work from home employees.

Companies Considering This Initiative

The same is noted by Deloitte India in its Pre-Budget Expectations 2022, quoting “Considering the current situation, employees are working from home across businesses. Employees are likely to incur additional ‘work from home’ – related expenditure, such as internet charges, rent, electricity, furniture, etc., and therefore, employers would need to provide allowances to meet these expenditures,” 

The company further added, “It is recommended that an additional deduction of ‘work from home’ allowance of INR 50,000 be given to employees who are working from home,”.

The Institute of Chartered Accountants of India (ICAI) also suggested the Government to provide tax relief on work from home expenses, saying “It is suggested that expenses incurred towards furniture/other set-up costs may be specifically exempted,” in its pre-Budget memorandum. 

Moreover, according to ICAI,  due to lockdown, organisations have implemented work from home, “Since the employees may not have the proper set up at home for carrying out official duties, the employer provides necessary set up so that the employees can execute their work efficiently and effectively.”

Further clarifying, ICAI said that tax exemption should be provided because the “provision of desk, chairs and another set up at employees’ residence in light of work from home could be taxed as perquisite in the hands of the employees.”

Increase In Standard Deduction Limit

The other suggestion is that the Government should increase the Standard Deduction limit under Section 16 of the Income Tax Act from Rs 50,000 to Rs 1 lakh.

Basically, Standard Deduction is an instrument to cover many expenses incurred during the course of the employment other than profession tax on employment. 

For the layman, these are various expenses that employees have to incur during the course of employment which they cannot claim as a deduction. 

Apart from this, the employees have to incur various expenses such as upgrading skill, for rendering their services as employees and deduction for such expenses needs to be enhanced every year. 

ICAI said, “It is suggested that the standard deduction u/s 16 may be enhanced to at least Rs. 100,000 to ease the tax burden of the employees and keeping in mind the rate of inflation and purchasing power of the salaried individual and rather it be linked to cost inflation index for regular enhancement in deduction amount similar to available for income under the head capital gains,”.

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