Finance minister Nirmala Sitharaman is set to present her fourth Union Budget on February 1 and all eyes are centred on how the government will take out populist steps while balancing the strains of fiscal consolidation.
While Indian corporates are anticipating some key declarations which will allow them to rebuild their growth agenda, individual taxpayers are wishing for some more disposable income in their hands to invest and spend more.
As India steps towards a $5 trillion economy by 2025, here are the top five corporate wish on direct and indirect taxes.
Direct Taxes
1) Section 80C reduction accessible up to Rs 1.5 lakh a year be modified upwards considerably.
2) To bring the elective concessionary tax regime, which came into influence from April 2021, more adequate, raise the limit of Rs 15 lakh income for putting peak 30% tax rate.
3) As Web 3.0 opens, crypto assets including a wide array of digital assets like non fungible tokens, wrapped asset token etc, will earn tremendous traction. it is being anticipated that a specialised regime for taxation of cryptocurrency will be initiated in the budget.
4) The pressure of the long-term capital gains tax (LTCG), introduced vide Finance Act 2018, has somewhat dented investor enthusiasm. Crucial economies do not have LTCG tax. In India too, it is predicted that LTCG on the sale of Indian-listed equity shares will be freed as it would improve investment through the stock exchange.
5) Corporates are anticipating that the whole amount, or an appropriate proportion of cost incurred for helping the society and employee welfare during Covid-19 will be allowed as deductible expense. Also, the government is predicted to reduce the tax rates for companies paid in R&D activities to 15 per cent or less and allow burdened deduction on in-house R&D expenditure.
In-direct Taxes
1) Rationalisation of Customs duty system for EV and ancillary elements, renewable energy production devices and related elements is possible.
2) Sector specific concessions for semi conductor manufacturers with emphasis on exports is predicted.
3) Budget allocations for the growth of the PLI scheme for sectors such as leather and laminates; additional incentive schemes will also attract companies into putting up additional manufacturing in sectors that were not the focus in earlier budgets and help nullify the impact of the pandemic.
4) The government is already surveying 400 customs duty exemptions (as announced in the previous budget). The final list is anticipated to be recommended as part of the 2022 budget and industry is predicting it so that there is no negativeable impact on business as a result of this exercise.
5) Extension of customs duty exemption on goods imported for testing, and setting up of a customs conflict resolution forum, relaxation compliances under customs, and integration of the current ICEGATE, DGFT and SEZ online portal into a civil digital platform.
