Enhancement In Basic Income Tax Exemption Limit Of Rs 2.5 Lakh Highly Awaited
Budget 2022: Over 36 per cent hoped for an increase in the 80C deduction limit of Rs 1.5 lakh and a small number of respondents are expecting an increase in standard deduction limit of Rs 50,000 for the salaried class.
New Delhi: On the individual tax front, 64 per cent respondents expect an enhancement in the basic income tax exemption limit of Rs 2.5 lakh, according to a KPMG survey. When asked about the most anticipated change for individual taxpayers the following were their responses 29 per cent wanted that the government to enhance the income limit of Rs 10 lakh at which the maximum marginal rate of 30 per cent tax is triggered.
Over 36 per cent hoped for an increase in the 80C deduction limit of Rs 1.5 lakh and a small number of respondents are expecting an increase in standard deduction limit of Rs 50,000 for the salaried class.
You may like to read
About 16 per cent expect tax-free allowances/ perquisites for salaried individuals keeping in mind work from home arrangement — provision of internet connection/ furniture/ ear-phones, etc.
Over 52 per cent of respondents feel that the faceless assessment scheme led to improved quality and efficiency in the assessment process
On the compliance side, there has been a significant increase in the scope of TDS and TCS provisions over the past few years. 86 per cent of respondents believe that the scope of TDS and TCS has led to increased compliance burden on taxpayers.
Currently, Indian branches of foreign companies are subject to corporate tax at 40 per cent.
With the government reducing headline corporate tax rate for domestic companies from 30 per cent to 22 per cent starting from financial year 2019-20, the gap between the rates applicable to foreign companies and domestic companies has widened.
Over 49 per cent of respondents believe there is a need to reduce the rate applicable to Indian branches in line with the 2019 rate cuts, in order for India to remain a globally competitive investment jurisdiction.
The Survey also found significant support for the government’s Production Linked Incentive Scheme (PLI) applicable for the telecom, pharmaceuticals, steel, textiles, food processing, white goods, IT hardware and solar sectors. Most respondents felt that this scheme would help India become a key manufacturing hub, and a whopping 83 per cent of respondents favoured an expansion of this scheme to cover other sectors
The availability of depreciation on goodwill has been a highly controversial matter. Amendments made last year put in place a blanket ban on claiming depreciation regardless of whether the goodwill arose through tax-neutral transactions like mergers or demergers or through taxable transactions like slump sales or non-tax neutral reorganizations. Most respondents (61 per cent ) however felt that this should be reconsidered, and a carve-out permitting depreciation on goodwill arising from taxable transactions should be announced
On the transfer pricing front, a significant majority of respondents expect the safe-harbour regulations to be rationalized in order to provide tax certainty to both taxpayers and tax administrators.
From a GST audit perspective, a significant proportion of respondents 41 per cent stated that they have started receiving audit notices.
Commenting on the findings of the survey, Rajeev Dimri, Partner and National Head of Tax, KPMG in India said: “Our Pre-Budget Survey indicates that relief for individual tax payers by way of an enhancement in the basic income tax exemption limit of Rs 2.5 Lakh is highly awaited. Respondents also support an upward revision in the top income slab of Rs 10 lakhs , and an increase in the existing section 80C deduction limit of Rs 1.5 lakh. Although the Government has taken several measures to resolve tax disputes and overhaul the tax dispute resolution framework over the past few years, further measures in this regard may help in reducing litigation. A rationalisation of TDS and TCS provisions to ease compliance burdens will also be welcome.”
For breaking news and live news updates, like us on Facebook or follow us on Twitter and Instagram. Read more on Latest Business News on India.com.