New Delhi [India], January 21 (ANI): Basic income tax exemption limit, which currently stands at Rs 2.5 lakh, is likely to be raise in the Union Budget 2022-23, according to a pre-budget survey conducted by KPMG.
"On the individual tax front, most respondents i.e. 64 per cent expect an enhancement in the basic income tax exemption limit of Rs 2.5 lakh," KPMG said in the survey report.
When asked about the most anticipated change for individual taxpayers, 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, while 36 per cent hoped for an increase in the 80C deduction limit of Rs 1.5 lakh.
A small number of respondents i.e. 19 per cent are expecting an increase in standard deduction limit of Rs 50,000 for the salaried class, while 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.
KPMG in India's pre-budget survey conducted in January 2022 has tried to capture the expectations of important stakeholders on various tax aspects of the budget. Nearly 200 respondents across sectors participated in the survey, KPMG said.
Nearly 52 per cent of respondents feel that the faceless assessment scheme led to improved quality and efficiency in the assessment process.
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," said Dimri.
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. 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.
About 72 per cent respondents felt that the government should extend the date of commencement of production beyond 31 March 2023 for new manufacturing companies intending to avail of the concessional 15 per cent tax rate given the impact of the pandemic.
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. 73 per cent of respondents believe that the Government should come up with detailed guidance on highly litigious transfer pricing issues like marketing intangibles, cost contribution arrangements, benchmarking of loans/guarantees, IP restructuring etc.
From a GST audit perspective, a significant proportion of respondents 41 per cent stated that they have started receiving audit notices, the report said. (ANI)