New Delhi: The government should double the standard deduction under the new concessional tax regime to Rs 1 lakh or increase the basic exemption limit to Rs 3.5 lakh in the next budget, tax and tax consultancy firm EY said. .
Listing priorities on tax reforms in the upcoming Budget, EY said the government should prioritize rationalizing tax structures, improving policy frameworks to promote economic growth and fostering an enabling environment for investment and development. development.
EY also suggested maintaining stability in corporate tax rates, rationalizing TDS provision and streamlining dispute resolution as possible areas to consider in the Budget to be presented to Parliament next month.
On the personal tax front, the favorable tax regime without exemptions and deductions should continue, she said.
To make it more attractive, the standard deduction under the concessional tax regime may be increased to Rs 1 lakh instead of the existing deduction of Rs 50,000 or the basic exemption limit may be increased from Rs 3 lakh to Rs 3.5 lakh, said EY, listing the policy priorities before the new government.
Under the current tax system, taxpayers can choose between the old regime, which offers several exemptions and deductions, and the new concessional regime, which provides lower rates and a standard deduction of Rs 50,000, but no exemptions.
EY said that the government has taken many welcome initiatives to improve technology and data-driven tax compliance processes, such as pre-filled returns, annual information return, ease of tax payment, faster processing of returns and refunds, etc. ., resulting in greater voluntary tax compliance. .
However, there is a need to improve the interface with the Central Processing Center (CPC) as taxpayers face persistent challenges in processing income returns.
EY also said priorities should include rationalization of tax deducted at source (TDS). Currently, there are 33 sections in the TDS dealing with different types of payments to residents, the rates of which vary from 0.1 per cent to 30 per cent.
EY said the complex structure of tax deducted at source (TDS) rates on different payment categories has created confusion and compliance burdens.
Simplifying these fees by consolidating categories and creating a small “negative list” of payments not required by TDS could streamline processes and reduce disputes.
Additionally, eliminating TDS/TCS on transactions that are already subject to GST returns would improve efficiency and reduce redundant compliance, said EY India national tax leader Sameer Gupta.
Regarding dispute resolution, EY said priority should be given to expediting anonymous appeals at the first level of the appellate authority, where submissions have already been made, improving the Advance Pricing Agreement (APA) process would expedite compliance and promote equity.
"These strategic reforms and improvements in tax policies and dispute resolution mechanisms are essential in fostering a conducive business environment and will improve the ease of doing business, thereby promoting economic resilience in the country," Gupta added.
Listing priorities on tax reforms in the upcoming Budget, EY said the government should prioritize rationalizing tax structures, improving policy frameworks to promote economic growth and fostering an enabling environment for investment and development. development.
EY also suggested maintaining stability in corporate tax rates, rationalizing TDS provision and streamlining dispute resolution as possible areas to consider in the Budget to be presented to Parliament next month.
On the personal tax front, the favorable tax regime without exemptions and deductions should continue, she said.
To make it more attractive, the standard deduction under the concessional tax regime may be increased to Rs 1 lakh instead of the existing deduction of Rs 50,000 or the basic exemption limit may be increased from Rs 3 lakh to Rs 3.5 lakh, said EY, listing the policy priorities before the new government.
Under the current tax system, taxpayers can choose between the old regime, which offers several exemptions and deductions, and the new concessional regime, which provides lower rates and a standard deduction of Rs 50,000, but no exemptions.
EY said that the government has taken many welcome initiatives to improve technology and data-driven tax compliance processes, such as pre-filled returns, annual information return, ease of tax payment, faster processing of returns and refunds, etc. ., resulting in greater voluntary tax compliance. .
However, there is a need to improve the interface with the Central Processing Center (CPC) as taxpayers face persistent challenges in processing income returns.
EY also said priorities should include rationalization of tax deducted at source (TDS). Currently, there are 33 sections in the TDS dealing with different types of payments to residents, the rates of which vary from 0.1 per cent to 30 per cent.
EY said the complex structure of tax deducted at source (TDS) rates on different payment categories has created confusion and compliance burdens.
Simplifying these fees by consolidating categories and creating a small “negative list” of payments not required by TDS could streamline processes and reduce disputes.
Additionally, eliminating TDS/TCS on transactions that are already subject to GST returns would improve efficiency and reduce redundant compliance, said EY India national tax leader Sameer Gupta.
Regarding dispute resolution, EY said priority should be given to expediting anonymous appeals at the first level of the appellate authority, where submissions have already been made, improving the Advance Pricing Agreement (APA) process would expedite compliance and promote equity.
"These strategic reforms and improvements in tax policies and dispute resolution mechanisms are essential in fostering a conducive business environment and will improve the ease of doing business, thereby promoting economic resilience in the country," Gupta added.
