1 Simplify capital gains taxation
As per Shalini Jain Tax Partner, People Advisory Services, EY India
The government may consider having a uniform holding period for all Indian domestic shares and mutual fund units (whether listed or unlisted/ equity or non-equity) for qualification as long-term capital asset.
b) The long-term capital gains tax rate can be aligned at 10% and short-term capital gains tax at 15% for all types of financial assets (such as listed and unlisted equity / preference shares, equity oriented mutual funds and instruments like REIT/Invit units and other financial assets.c) Indexation benefit may not be needed for long-term capital gains on sale of financial assets if the tax rates and holding period are aligned. d) Allow set-off of long-term capital loss with short-term capital gains.2. Standard deduction limit should be hiked
There are many compelling reasons to raise the limit of the standard deduction from Rs 50,000. “There is merit for the Government to consider an increase in the standard deduction limit from Rs 50,000 per annum to Rs 1,00,000 per annum,” says Sonu Iyer, Tax Partner and People Advisory Services Leader, EY India. Several experts say there is a need to raise standard deduction now because of inflation and Covid impacts as well as to bring parity with business-income earners.
Rising inflation: Standard deduction was last revised in 2019. Given the rising inflation and the increased living expenses of salaried individuals now, the deduction of Rs 50,000 is a bit low, says CA Ritika Nayyar, Partner, Singhania & Co.
Deepashree Shetty, Partner, Tax & Regulatory Services, BDO India told ET Wealth Online earlier, “Since 2019, the average inflation rate in India has increased from 3.73% to 5.51%. An increase in standard deduction of at least 30% — i.e., up to Rs 65,000 — will be appropriate.”
3. Allow NPS investment tax break of Rs 50,000
As of now, an individual’s contribution of up to Rs 50,000 to the National Pension System (NPS) under Section 80CCD (1B) as deduction under the old tax regime but not under the new tax regime. Promotion of retirement saving is also a stated goal of the government because of which the above-mentioned deduction was allowed over and above the tax saving investment limit of Rs 1.5 lakh under Section 80C in the old tax regime.
4. Ease TDS rules for buying house property
Mousami Nagarsenkar, Partner, Deloitte Touche Tohmatsu India LLP told ET Wealth Online: The government needs to facilitate ease of transacting and reduce compliance difficulties in buying property from NRIs. The government should consider simplifying the TDS compliance process for individual buyers when buying from NRIs. This can be done by making the TDS compliance requirements for individual buyers the same when buying from resident sellers and NRI sellers. The government should remove the need for the buyer to get a TAN in case of NRI seller and enable such buyers to use the PAN based challan-cum-return form as exists in case of purchase of property from resident sellers.
5. Past year’s TDS credit to be claimed online
The Form 71 option might require manual intervention from the assessing officer (AO) while most of the refunds are now processed by the Centralised Processing Centre (CPC). Experts opine that it becomes a tedious exercise for the affected taxpayers to get the TDS refund.
To facilitate an online window for such taxpayers, the PHD Chamber of Commerce has given the following suggestion to the government: “Section 199 read with Rule 37BA be accordingly modified to give option to the assessee to claim TDS credit on such income either in the year when the Income was reported in ITR or as per 26AS year in which TDS is appearing in Form 26AS provided income of the same is offered for tax in either of the year.”
6. Ease tax burden of homebuyers
Shalini Jain, Tax Partner, People Advisory Services, EY India told ET Wealth Online: Though the Interim Budget 2024 is a ‘vote-on-account’ budget, homebuyers would be hopeful that certain relief measures are introduced to lower the tax burden. These could include:
Increase in the limit of eligible deduction for interest paid on home loan to at least Rs 3 lakh as the same has not been changed since 2014, when it was enhanced from Rs 1.5 lakh to Rs 2 lakh. This deduction will benefit all homebuyers – whether their property is self-occupied or rented out.
In case of house property given on rent or house property which is declared as ‘deemed to be let-out’, the government may remove the capping of Rs 2 lakh which is allowed to be set-off against salary (after adjustment with other rental income, if any) in the same year. This will provide much-needed relief to those who have given their houses on rent or those taxpayers who are paying taxes on notional rent on ‘deemed to be let-out’ house property even when there is no real income earned by them from such property.
7. Tax free up to Rs 10 lakh premium on life insurance products
Sumit Rai, MD & CEO, Edelweiss Tokio Life Insurance tells ET Wealth, “A lot of expectations continue to be what they were. The annuity double taxation is a big one because India is one of the largest grey countries and a part of the reason annuities are not doing as well is the taxation structure. You are taxing it at entry and exit. Another thing that the industry has been asking for a while is to let go of GST on insurance. Thirdly, if the Rs.5 lakh cap can be increased to, say, Rs.10 lakh, it would help.”
8. Simplify ITR filing process for NRIs
Homi Mistry, Partner, Deloitte India told ET Wealth Online: The government has taken various measures in the recent past to simplify income tax return (ITR) filing processes, however, there is still scope to do more, especially for Non-Resident Indians (NRIs) filing ITRs in India.
However, due to certain complexities involved in the ITR filing processes, they may end up skipping the ITR filing in India or delay the process. While they can get assistance from tax consultants in India to complete the ITR filing processes, there are certain difficulties faced by NRIs in completing the end-to-end filing process and receiving the income tax refund claimed in their ITR.
9. Hike savings account interest deduction to Rs 50,000
Tapati Ghose, Partner, Deloitte India and Sangeetha BM, Manager, Deloitte India told ET Wealth Online: Keeping money in savings accounts and investing in fixed deposits are not considered as lucrative investment options as the current interest rates coupled with tax benefits are low as compared to equity which offers higher return with higher risk. Enhancing the deduction limit along with widening the scope of the section 80TTA, would also boost investment in the banking sector and could also become popular due to its ease of operation and understanding compared to a wide variety of complex investment options available in the market.
10. Expand AIS to include 6 more incomes of individuals
According to Bhavin Rajput, Director, Deloitte Haskins & Sells LLP, “Since the introduction of AIS in November 2021, the statement reflects various incomes irrespective of whether tax is deducted on such income or not. However, there are few areas to expand the AIS like reporting of bank accounts or consistency in reporting rental income from house property.”
Budget 2024 could expand AIS to include 6 more incomes of individuals
11. TDS / TCS certificate requirement
CII: To reduce compliance burden, it is recommended that the requirement to issue TDS / TCS certificate can be done away with exceptions for (A) Salary TDS certificates in Form 16, (B) TDS certificates to non-residents and (C) Higher TDS/TCS where PAN is not available.
Tax Deduction at Source @ 1% under section 194O – Applicability on Farmers/ FPOs It is suggested that digital platforms operated for the benefit of farmers / FPOs should be excluded from the purview of section 194O.
12. Mismatch between TDS credit as per Form 26AS and ITBA
CII greatly appreciates the focused efforts made by the Government towards expeditious refunds to taxpayers through faster processing of returns under section 143(1). In keeping with this focus, it is suggested that the internal systemic issue of mismatch between Form 26AS and ITBA should be expeditiously resolved and TDS credit as appearing in Form 26AS should not be denied on the ground of mismatch with ITBA.
13. Perquisite tax in respect of Electric Cars
It is recommended that a suitable amendment is brought to the Income Tax Rules, 1962 to clarify the criteria for perquisite taxation of Electric Vehicles provided to employees by employers.
14. Rationalise capital gains tax structure
Rate structure At present, there is no consistency in tax rates or holding period for different types of instruments falling within the same asset class. Even the indexation benefit differs in different situations.
15. Time limit for filing revised return
It is suggested that the time limit for filing revised returns should be extended at least till end of assessment year to enable taxpayers to claim/modify foreign tax credit in line with extended time limit available for furnishing Form 67 to claim such credit.