The middle class, hit by the pandemic, can expect some kind of relief in the budget such as a hike in standard deduction to Rs 1 lakh which will put money in the hands of the salaried to meet their medical expenses.

Finance minister Nirmala Sitharaman may also consider measures such as extending the LTC cash voucher scheme, relief on work-from-home expenses and deduction for Covid treatment.

Senior finance ministry officials said there have been several suggestions to provide relief to the salaried as the pandemic has impacted their expenses.

They said some of the suggestions could find their way in the budget proposals — but the finance minister may not tinker with the tax slabs.

Keeping in mind the burgeoning medical cost, tax experts suggested the standard deduction — the one-time deduction from salary income — may be raised from the existing Rs 50,000 to Rs 1 lakh.

Gopal Bohra, partner, NA Shah Associates, said “though there is not much scope with the finance minister to reduce the personal income tax rates, she can consider increasing the threshold limit of certain exemptions/deductions”.

Exemption under section 80C can be increased to Rs 3 lakh from Rs 1.5 lakh. Similarly, the benefit of interest on loan taken for buying a self occupied house can be raised to Rs 3 lakh from Rs 2 lakh, Bohra said.

Rumki Majumdar, an economist with Deloitte, said “work-from-home meant additional strain on the pocket for most salaried individuals. They had to spend more on the internet, telephone, and electricity usage. Many people also set up a home office, which necessitated the purchase of furniture”.

“In all probability, salaried individuals would be hoping for a work-from-home allowance that would cover these expenses and also provide tax relief,” Majumdar said.

Parizad Sirwalla, partner and head, global mobility services — tax, KPMG in India, said “On account of the recent spike in Covid-19 cases and the resultant restrictions imposed by various state governments it is likely that the individuals may not be able to undertake travel. Therefore, the LTC cash voucher scheme should be extended for two more years till March 31 2023 to enable employees to avail the scheme.”

The scheme was announced in October 2020 to provide tax benefits to individuals unable to claim LTC relief because of Covid-19 travel restrictions. It was notified in Finance Act 2021.

Industry chamber Ficci has suggested that an “extra deduction under section 80D of the Act may be granted for expenditure incurred towards testing for Covid-19 infection and/or medical treatment and/or self-quarantine or home isolation”.

“This should be over and above the current limits under section 80D of the Act and allowed even if the individual has opted for concessional tax rates under section 115BAC.”

The income-tax act permits exemption for health insurance premium and select health expenses.

Exemptions on health premiums can be claimed up to Rs 25,000 for persons under 60 and up to Rs 50,000 for those above 60 years.