While individual tax-payers are expecting that the Finance Minister Nirmala Sitharaman will announce a slew of tax benefits in the upcoming Union Budget, city-based tax professionals are looking forward to see various amendments and relaxation in some of the taxes. They are also eyeing on some sector specific policies in the Union Budget to be presented on February 1. Chartered Accountant Kailash Jogani said there is a need to reconsider the high rate of tax. Jogani felt that the rate of tax u/s 115BBE be restored at the pre-demonetization period i.e., to 30 per cent.
Jogani further felt the need to reduce high surcharge rates for individuals and HUFs. The surcharge was increased to 25 per cent and 37 per cent for total incomes above Rs 2 crore and Rs 5 crore, respectively by Finance (No.2) Act, 2019. The increase in surcharge has resulted in effective tax rates of individuals/HUFs as high as 42.74 per cent. It is a disincentive for high income earners to stay in India long-term. The high surcharge of 25 per cent and 37 per cent may be reviewed, and a long-term road map is set for eventual reduction, he added.
“The basic exemption limit on income tax may be kept at Rs 5 lakh. The income above Rs 5 lakh upto Rs 20 lakh may be taxed at 20 per cent. The income above Rs 20 lakh upto Rs 60 lakh at 30 per cent and above Rs 60 lakh at 35 per cent with no surcharges or cess on any slab,” Jogani observed.
Chairman of COSIA Vidarbha CA Julfesh Shah said special tax sops for MSME are needed. “With MSMEs contributing 30 per cent to India’s GDP, special tax benefits must be extended to MSME units which will prove to be a game changer for the economy. It is time to address the domestic and international challenges that MSMEs are facing due to disruption in supply chain, availability of funds, labour problems etc.,” he said.
Shah further said that key focus should be on incentivising renewable sources of energy for sustainable growth.
Apart from this, he felt the need to give relief to homebuyers as high interest rates have dented the affordability and it is beginning to hurt the repaying capacity.
“With almost five lakh units stuck in various stages across cities, Budget 2023 can put more money in the hands of people. The Government should enhance the tax rebate on housing loan interest from Rs 2 lakh to at least Rs 4 lakh which will also boost the real estate sector,” he said.
Chairperson of Nagpur Branch of Institute of Chartered Accountants of India CA Jitendra Saglani is also expecting an amnesty scheme for first three years of GST implementation besides hike in the basic exemption limit on Income Tax from Rs 2.5 lakh to Rs 5 lakh for individuals. For encouraging savings under section 80C, Saglani said, themlimit should be hiked from Rs 1.5 lakh to Rs 3 lakh. Rationalising income tax rate on partnership and LLPs in sync with taxation on body corporates from 30 per cent to 25 per cent and increasing the capital gains tax limit on equity and equity oriented mutual funds from Rs 1 lakh to Rs 3 lakh are other expectations of Saglani.
CA Varun Vijaywargi felt the need for an amnesty scheme for the indirect tax payers. “Taxpayers must have made mistakes in paying taxes during initial years of Goods and Service Tax (GST) on account of interpretation or inadvertent errors, accordingly, an amnesty scheme giving immunity from interest and penalty and rebate in tax dues is the most awaited announcement from this Budget,” he said.
Similarly, Input Tax Credit on construction of warehouses and cold storage should be allowed as the same is ultimately let out to various industry and third-party logistics players. This will effectively reduce logistics cost from 14 per cent to 7-8 per cent, which is aimed under the National Logistics Policy unveiled recently, he added.
Vijaywargi also said that petroleum products should be included in the GST net so that input tax credit is available on such products and high fuel cost comes down. This would give a boost to NLP and PM Gati Shakti programme.