Government The government should double the standard deduction to Rs 1 lakh or increase the basic tax exemption limit to Rs 3.5 lakh under the new concessional tax system in the upcoming budget. This opinion has been expressed by tax and consulting company EY. Mentioning the priorities of taxation reforms in the upcoming budget, EY has said that the government should give priority to streamlining the tax framework, improving the policy framework to promote economic growth and promoting a favorable environment for investment and growth.
Corporate tax should remain stable
EY suggested that corporate tax rates should be kept stable, TDS provisions should be rationalised and dispute resolution should be streamlined. The company said that on the personal tax front, the concessional tax regime should continue without exemptions/deductions. Listing the policy priorities before the new government, EY said that to make it more attractive, the standard deduction under the concessional tax regime can be increased from the current Rs 50,000 to Rs 1 lakh or the tax exemption limit can be increased from Rs 3 lakh to Rs 3.5 lakh.
Currently, taxpayers choose between the new and old tax regimes
Under the current tax system, taxpayers can choose between the old regime and lower rates and the new concessional regime. While the old system provides various exemptions and deductions, the new tax system provides a standard deduction of Rs 50,000 but no exemptions. EY said that the government has taken several welcome steps to improve technology and data-driven tax compliance processes. These include pre-filled returns, annual information statements, ease of tax payment, faster processing of returns and refunds, etc. This has improved the situation of voluntary tax compliance.
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