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The Union Budget 2022 is fast approaching and like every year, India Inc and individuals are looking forward to the announcements in the Budget, especially on the tax front. To gauge the market sentiments and better understand the expectations from this year's Budget, Grant Thornton Bharat conducted a pre-budget survey.
The survey results highlight a high level of optimism with respect to resilience in the economy. 81% of respondents expect that the third wave of the pandemic will not cause major disruptions and the economy will continue to grow in 2022. The survey also highlights that rationalisation of corporate tax compliances and certain tax relief to individual taxpayers are the top asks of the taxpayers from the upcoming budget.
A majority of the respondents believe that personal taxation requires some reform in the upcoming budget. 57% of respondents chose personal taxation as the top area for reforms, followed by customs and GST which stood at 25%. Households adversely impacted by the pandemic expect some measures that would leave more cash in hand to bring some cheer amidst all the gloom.
69% of respondents expect that the government would increase the basic exemption limit applicable to individual taxpayers from the existing ₹ 2.5 lakh. Further, 90% of respondents feel that the government should either increase the section 80C deduction limit or the standard deduction in the upcoming budget.
Businesses expect rationalisation of corporate tax compliances to provide impetus to ease of doing business. This is also reflected in the survey results. 39% of respondents consider an overall reduction in corporate tax compliance obligations as the key area that needs immediate attention from a corporate tax standpoint.
Further, a lot of time and effort is currently being spent by corporates to fulfil their TDS/TCS compliance obligations which at times are also onerous. It is time to re-look at the TDS/TCS regime in India and make necessary edits, to ensure that while revenue's interest is protected, the burden on the taxpayers is also reduced. The survey result also reinforces this sentiment. The majority of respondents feel that the government should comprehensively address the challenges faced by a taxpayer to rationalise and simplify the TDS/TCS regime.
76% of respondents want the government to announce another dispute resolution scheme to resolve pending indirect tax litigation. Considering the success of the ‘Sabka Vishwas – Legacy Dispute Resolution Scheme, 2019', it would be very helpful if the government comes out with an amnesty scheme for legacy indirect tax laws. Such a scheme will be beneficial for both the government as well as the taxpayers.
On corporate taxation, 28% of respondents feel that the reduced 15% corporate tax rate should be extended to all sectors (including the service sector) and should be linked with new investment(s) instead of a new entity. The reduction in rate for all sectors will not only encourage further investment but would also lead to employment generation.
Ongoing pandemic has posed a lot of challenges for different stakeholders in the economy. Thus, this year's budget will be a tight rope walk for the government to manage diverse expectations. It is best to stay focused on the long-term economic growth with some short-term interventions for a few sectors.
Despite the economic pressures, no new taxes or surcharges should be introduced. The focus should be on rationalising compliances, making alternative dispute resolution mechanics functional and result-oriented, and speeding up the implementation of announcements made earlier on various initiatives.
More than 5,000 respondents participated in the survey across digital platforms.
This article was originally published in NDTV.