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In India, the tax rate on domestic companies is currently being levied at 30%, which is quiet high in comparison with the global standards. 
 
Finance Minister Arun Jaitley, while presenting Budget 2015-2016, stated that the rate of corporate tax will be reduced to 25% over the next four years along with corresponding phasing out of exemptions and deductions available under the Income Tax Act, 1961. 
 
The Finance Act, 2016 has phased out many exemptions and deductions available under the Act, however, the rate of tax has been reduced to 29%, that too, for a domestic company provided its total turnover or gross receipts in the previous year 2014-2015 does not exceed Rs. 5 crore. 
 
Also, the Finance Act, 2015 increased the surcharge rate by 2% if the income exceeds a specified threshold, i.e. Rs 10 crore in case of a domestic company and Rs 1 crore in case of a firm. 
 So, expectations from Jaitley in <keyword id="6599769" type="UNKNOWN" weightage="20" keywordseo="Budget-2017">Budget 2017</keyword> will be high on tax revenues and deductions. Some of the tax deductions have remained unchanged for nearly two decades. The government could consider adjusting these deductions to inflation and removing the ones which are redundant. This can be done for individual taxpayers. 
 
“The government could consider adjusting these deductions to inflation and removing the ones which are redundant. This can be done for individual taxpayers,” said Archit Gupta, Founder, ClearTax.com. 
 
In the US, personal tax deductions are inflation adjusted every year. While corporate tax rates could be linked to encouraging investment and flow of capital. Or tax free regime to encourage start-ups or specific sectors such as fintech. 
 
Besides, the share of direct taxes in total collections has seen a downward trend. Since direct taxes play an important in ensuring equality they should form a larger portion of total tax collections. “Indirect taxes are consumption based and impact everyone equally, India must focus on raising the share of direct taxes like the US and UK. This can be done with a play of tax rates (between direct and indirect taxes) and widening of base,” said Gupta. 
 
India also needs reforms in tax compliance. When compared to countries such as US, UK and China, the tax compliance of India, which reflects how our tax revenues keep up with the GDP growth, stands at 17.7%. Whereas, the tax compliance in US is 26.9% and UK is 34.4%. 
 
“Hopefully, with recent digitisation drive and launch of GST, tax compliance is likely to go up. It will be interesting to watch how demonetisation impacts growth and spending. Higher bank balances can lead to higher spending, which can be inflationary in some circumstances. Digitisation could pave the way for financial inclusion for lakhs of people,” said Gupta. 
 
Around 80% of transactions in the US and nearly 90% of transactions in UK are cashless. So there is a huge potential for India, which can lead to wider compliance and growth in filing of tax returns. 
 
(Image: Thinkstock)

Here are the reforms that India needs to compete with UK, US and China in tax deductions

India and China are two biggest economies in the Asian region and both the nations have always been compared time and again on <a href="http://www.businessinsider.in/searchresult.cms?query=gdp&amp;sortorder=effectivedate">GDP</a>, taxes, startups, ease of doing business etc. 
 
In India, there is a concrete structure for <a href="http://www.businessinsider.in/searchresult.cms?query=direct+tax&amp;sortorder=effectivedate">taxation </a>and the main body which collects taxes is Central Board of Direct Taxes (CBDT). 
 
In <a href="http://www.businessinsider.in/searchresult.cms?query=china&amp;sortorder=effectivedate">China</a> too, tax is the most important source of fiscal revenue. After the tax system reform in 1994 and the fine-tuning of it in subsequent years, China has preliminarily built up a tax system adaptable to the socialist market economy, which has been playing an important role in assuring China's fiscal revenue, broadening the opening to the outside world. 
 
When it comes to individual tax, direct taxes are levied exclusively by the Centre. 
 
Currently, the peak tax rate of 30% is made applicable over an income of Rs. 10 lakh for individual taxpayers. However, the income level on which peak rate is applied in other countries is significantly higher. Hence, there is a need for further raising the income level on which the peak tax rate would trigger, to make the same compatible with the international standards. 
 
Today, a little over half of the Indian Government’s aggregate tax revenue comes from direct taxes. 
 
India is doing far better than some countries, for instance China. 
 
According to <a href="http://www.businessinsider.in/searchresult.cms?query=world+bank&amp;sortorder=effectivedate">World Bank</a> data in 2014, China had a per capita income of $7,380 as compared to India’s $1,570. Yet, India’s direct tax collection as a proportion of GDP was higher than China’s 5.3%. 
 
The tax on an individual's income in China is progressive. An individual's income is taxed progressively at 3% - 45%. 
 
Meanwhile, as per FICCI recommendations, individuals having income upto Rs 3 lakh should not taxed. 
 
The Finance Act, 2016 has levied surcharge @ 15% on individuals having total income exceeding Rs. 1 crore. The surcharge @ 10% on individuals having taxable income above Rs. 1 crore was introduced in the Budget 2013-2014 though only for a year. The surcharge on individuals has been increased over the years from 10% to 15%. It is observed that the increased surcharge on certain category of individuals distorts equity and tends to discourage entrepreneurship and incentivizes people to relocate to other locations. 
 
FICCI suggested that the <a href="http://www.businessinsider.in/searchresult.cms?query=budget+2017&amp;sortorder=effectivedate">Union Budget 2017-2018</a> should withdraw the levy of surcharge on individuals having income above Rs. 1 crore.

India has a better income tax structure than China. Here are the details

If you are thinking of building the brand of your startup and fretting over taxes, Finance Minister Arun Jaitley may have some good news for you. 
 The Finance Ministry is mulling to give beneficial tax treatment to brand building expenses of the <keyword id="6362513" type="ORGANIZATION" weightage="20" keywordseo="Startups">startups</keyword>. 
 
If everything goes as planned, startups and e-commerce companies will be allowed to have initial brand building expenses with benefits. 
 
"The AMP expenses are very important for e-commerce companies to acquire new customers. A major part of these expenses is intangible and the government should allow identified category of AMP expenses to be capitalised," said KPMG (India) Partner Tax Amarjeet Singh. 
 
Experts say that expenditure in advertisement, marketing and sales promotion (AMP) should be an intangible asset. 
 
Such a move, according to Ashok Maheshwary and Associates Managing Partner Amit Maheshwari, would help reduce the losses and prevent net-worth erosion of the company. 
 
The government has decided to give host of tax incentives to encourage startups and some decisions are likely to be announced by Finance Minister Arun Jaitley in the 2016-17 Budget, to be presented on February 29. 
 
"Further, relaxation of withholding tax compliances by e-commerce companies, which are more in the nature of the startups, would enable them to focus more on the business with the reduced administrative burden resulting from relaxation," Deloitte Haskins &amp; Sells LLP Partner CA Gupta said. 
 
(Image: Thinkstock)

Budget 2016: Here’s why startups should not worry about expenses on brand building

Planning a <keyword id="6358021" type="PERSON" weightage="20" keywordseo="budget">budget</keyword> for 2017 and thinking of buying your dream house? If yes, you should definitely not overlook some of the tax benefits that were introduced in Budget 2016. Home loan borrowers can get additional benefits, if they qualify. Also, if you haven’t received <a href="http://www.businessinsider.in/searchresult.cms?query=House+Rent+Allowance&amp;sortorder=effectivedate">House Rent Allowance</a> (HRA), you should also check as to whether you can claim the increased tax break given to them in Budget 2016. 
 
Under Section 80EE of the <a href="http://www.businessinsider.in/searchresult.cms?query=Income+Tax+Act&amp;sortorder=effectivedate">Income Tax Act</a>, 1961, first-home buyers availing home loans in 2016-17 are allowed to take additional tax benefit of up to Rs 50,000. So, a home loan borrower paying interest on the loan can claim deduction of interest so paid from his/her gross total income up to a maximum of Rs 2 lakh per annum under Section 24. However, there are some conditions attached to it and they are: 
 
The additional deduction with respect to interest on loan taken will be applicable only for residential self occupied house property. 
 
It's only for first-time home buyers. 
 
The maximum additional benefit is capped at Rs 50,000 a year. 
 
The value of the house for which loan is taken cannot exceed Rs 50 lakh. 
 
The loan amount cannot exceed Rs 35 lakh. 
 
The loan has to be sanctioned between April 1, 2016 and March 31, 2017. 
 
Illustratively, on a home loan of Rs 35 lakh at 9.6/8.6 per cent interest for 15 years, the first year interest amount comes to approximately Rs 3.3 lakh and Rs 2.96 lakh, respectively. 
 
Other thing that one can look for is the increase in time period for claiming deduction of interest. In a home loan, the interest payable up to Rs 2 lakh gets deducted from gross total income while computing income from self-occupied house property. However, it is only applicable in cases where the acquisition or construction of the house is completed within three years from the end of the financial year in which the loan was taken. 
 
In <a href="http://www.businessinsider.in/searchresult.cms?query=Budget+2016&amp;sortorder=effectivedate">Budget 2016</a>, there was a relaxation in the time period and the <a href="http://www.businessinsider.in/searchresult.cms?query=tax+benefit+&amp;sortorder=effectivedate">tax benefit </a>would hold even if the acquisition or construction is completed within five years from the end of the financial year in which the capital was borrowed. 
 
All those getting house possession this year, this extension gives a relief. With builders not completing projects on time and delivery of homes getting delayed, this change in tax rules will benefit several home loan borrowers and they will not suffer (due to inability to avail tax benefit) because of builder's default in handling over the homes in time. 
 
One can also look for benefit, if they aren’t getting HRA. Section 80GG provides for a deduction of any expenditure incurred by an individual in excess of 10 per cent of his total income towards rent payment with respect to any furnished or unfurnished accommodation occupied by him as his residence if he is not granted HRA by his employer, to the extent that such excess expenditure does not exceed Rs 2,000 per month or 25 per cent of his total income for the year, whichever is less. 
 
In Budget 2016, relief was provided to such employees. The maximum limit of deduction was increased from the existing Rs 2,000 per month to Rs 5,000 per month.

These were the home loan tax benefits that were announced during Budget 2016

Post <a href="http://www.businessinsider.in/searchresult.cms?query=demonetisation&amp;sortorder=effectivedate">demonetisation</a>, India faced acute cash crunch due to which demand went crashing. The consumption reduced due to note ban and now the government is looking to revive it. 
 
The <a href="http://www.businessinsider.in/searchresult.cms?query=prime+minister+narendra+modi&amp;sortorder=effectivedate">Prime Minister Narendra Modi </a>may spur demand by slashing <a href="http://www.businessinsider.in/searchresult.cms?query=income+tax&amp;sortorder=effectivedate">taxes</a> in <a href="http://www.businessinsider.in/searchresult.cms?query=budget+2017&amp;sortorder=effectivedate">Budget 2017</a>. This may hurt its short-term revenue spurt, which his administration had been touting as proof of success of the currency policy change. 
 
"Economic growth is unlikely to accelerate in the near term on its own so the situation for the government is such that in order to improve their own credibility, the government will have to improve demand for goods and services. So the personal income tax slabs or rate may be reduced in the budget to give higher purchasing power to consumers," Nihal Kothari, executive director at tax firm Khaitan and Co. in Mumbai, told <a href="https://www.bloomberg.com/news/articles/2017-01-22/modi-budget-may-put-consumers-before-taxes-to-spur-india-demand">Bloomberg</a>. 
 
Coming to <a href="http://www.businessinsider.in/searchresult.cms?query=indirect+taxes&amp;sortorder=effectivedate">indirect taxes</a>, net revenue from customs, excise and service taxes climbed up 25% in April-December from a year earlier, meeting 81% of the government's budgeted target for the year through March 31. 
 
"The government may be forced to roll back some of the excise increases on fuel as this could feed into inflation. So additional tax revenues will come from greater compliance as we near the GST regime and the threat of scrutiny rather than economic growth," Kothari told Bloomberg. 
 
For instance, net indirect tax collection through November 2016 grew 26.2% due to higher tax rates and other special measures and just 8% after you strip out these effects Service tax numbers too are flattered by an increase in the rate to about 15 percent last year from 12.4% in April 2015. 
 
In direct taxes, net revenue from corporation and income taxes rose 15.1% April-November from a year earlier, helping meet about 49% of the government's budget goal. Collections rose to 65% of the target in December, the government said Jan. 9. 
 
Tax breaks may be offered to those who invest in funds that contribute to building crucial roads, ports and highways. Lowering the personal income tax rate would boost compliance and since less than 1 percent of the population pays this tax, revenue losses would be limited, according to Kotak Securities Ltd., which calls for a cut.

This Budget, Govt is going to do anything to push demand that went down due to note ban. Here’s what it may do in taxes

Commoners' understanding and expectations are often very different from a purely economic and strategic understanding of the budget. For many people, the budgetary exercise means some things getting more expensive and some getting relatively cheaper. 
 
However, the budget is not just about making some goods and services expensive and cheaper, but is a tightrope exercise of the government where it tries to match national priorities with the available resources in hand. The future expectations of resources (namely in the form of revenues to the government) and usage of these resources for different purposes (likely expectations of expenditure) is done in the budget. 
 The <keyword id="6355261" type="POSITION" weightage="20" keywordseo="Finance-minister">Finance Minister</keyword> and his team's task is a difficult one at present, especially after the six bimonthly review by the RBI on 2nd Feb clearly mentioned its expectation from the budget. The RBI stated that it expected the government to stay on the path of fiscal consolidation and expected to go ahead with structural reforms that will help the economy come on a sounder footing. This comes after the NCAER lecture of RBI central bank Governor alluding to the pitfalls of the fiscal profligacy which can lead to catastrophic results including <keyword id="101998" type="UNKNOWN" weightage="20" keywordseo="high-inflation">high inflation</keyword>, capital outflows and loss of value of the currency. He talked about the recent example of Brazil to drive home the point that fiscal profligacy can end up leading to a greater trouble than the expected gains of such profligate steps. 
 On the side of the common people are concerns like <keyword id="6354751" type="COMPANY" weightage="20" keywordseo="Income-Tax">income tax</keyword> rates, tax deductions and a host of things about what will get relatively cheap and what will get relatively expensive. While it is too early to comment on the specifics of the budget, a welcome thing for people would be if the government accepts some of the recommendations of the Justice Easwar committee especially the concerns which pertain to the procedural aspects. 
 Earlier this year Justice Easwar Committee had put forth several measures that could be seen to be beneficial to the ordinary people. The committee was formed to into looking into the <keyword id="45697" type="COMPANY" weightage="20" keywordseo="Direct-Tax">direct tax</keyword> laws especially the Income Tax of 1961, of the country and simplify them for various stakeholders including individuals, small businesses and companies. The other purpose was to reduce unnecessary litigation. The ten member panel's draft report had made 27 suggestions under the IT Act and eight for reform through administrative instructions. The committee among other things had recommended 'enhancement and rationalisation of the threshold limits and reduction of the rates of TDS. TDS rates for individuals and HUFs to be reduced to 5 percent as against the present 10 percent', the report had stated. 
 
Another important suggestion is the proposed deletion of the clause that allows the tax department to delay the refund due for a taxpayer beyond six months and suggests a higher rate for delays in refunds. 
 Apart from this, another major recommendation was the treatment of stock trading gains up to 5 lakh to be treated as capital gains rather than business income, a move that could see more <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">investments</keyword> in the stock market from the side of the retail investors. 
 
These procedural aspects apart from the change in the personal income brackets could help the common people benefit from the budget. On the indirect tax side much is not clear as the Government has had a deadlock with opposition on GST. This budget could be an important one from the viewpoint of tax laws in the country, both direct and indirect. 
 
(The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India. Amit Kapoor is Chair, Institute for Competitiveness &amp; Editor of Thinkers. The views expressed are personal. Amit can be reached at <a href="mailto:amit.kapoor@competitiveness.in">amit.kapoor@competitiveness.in</a> and tweets @kautiliya)

Budget 2016 may or may not meet expectations of the common man

Prime Minister Narendra Modi wants to walk the talk and fulfil his commitment of creating more jobs. In lieu of this, employers may get 30% income tax exemption for creating extra jobs. 
 In <keyword id="2783177" type="UNKNOWN" weightage="20" keywordseo="Budget-2016">Budget 2016</keyword>, it is likely that Finance Minister Arun Jaitley will announce an array of incentive for job creator. 
 
ET reported that a panel of secretaries suggested fiscal and monetary incentives, including 30% income tax exemption for units that create an additional 2% jobs. 
 
Also, the employer could be given a 125% rebate on provident fund contributions. 
 
As per the data with labour bureau, only 50% of the population aged 15 years and above is employed. 
 
“The labour ministry has proposed various fiscal and monetary interventions as part of the government's employment-generation strategy and this is likely to find its way in the budget considering that PM Modi had committed to incentivise employment generation in the country," an official told ET.

Employers can expect something great in Budget 2016. Find out what

The <a href="http://www.businessinsider.in/searchresult.cms?query=budget+2017&amp;sortorder=effectivedate">Budget for 2017</a> is riding on a lot of expectation in the aftermath of <a href="http://www.businessinsider.in/searchresult.cms?query=demonetisation&amp;sortorder=effectivedate">demonetisation</a>. It’s almost as if people are hoping the government to now make good for the hardship and the pain they endured. Some key states are due for elections in the coming months. And this seems to be the perfect backdrop to make it a dream budget for households and businesses. 
 
Lower tax burden - Since the beginning of time, governments have faced pressure to cut <a href="http://www.businessinsider.in/searchresult.cms?query=taxes&amp;sortorder=effectivedate">taxes</a> on income. This pressure is now rising from the working class, who are asking for higher exemption limit in the wake of <keyword id="3315394" type="UNKNOWN" weightage="20" keywordseo="demonetisation">demonetisation</keyword>. Rs 2.5lakhs is the existing exemption limit. Income disclosure scheme (IDS) has helped the government add around Rs 30,000 crores to its kitty. But the real test of these schemes lie in their ability to bring more people in to the tax net, leading to wider compliance and tax filing. Every increase in the minimum taxable limit or lowering of tax rates, means fall in revenue for the government. The government needs to find that sweet spot where it can balance this loss without severely impacting its fiscal deficit. With Niti Aayog recommending tax slab expansion, a revision may be in the offing. 
 
Popularising NPS – NPS is a credible alternative to EPF for those who prefer equity linked investing to build a corpus for their retirement. It may be hard to sustain high returns on EPF, and therefore the government can focus on offering people an alternative in the form of NPS. The government has made efforts to ease entry to NPS by making it aadhaar linked, more clarity on taxes on its withdrawals are required. NPS is structured in the form of TIER1 and TIER2 accounts. While investments in TIER 1 are eligible for tax benefits. TIER2 is a voluntary investment account. Withdrawals are allowed from TIER 1 post retirement. Investors can withdraw from TIER 2 at any time. However, PFRDA must put together details on tax on withdrawals from TIER 2. Investments to TIER1 may be limited due to tax benefit being Rs 50,000 in a financial year, once there is clarity about TIER2, investors can enjoy the flexibility that comes with TIER2 accounts, as well as stay committed to investing for their retirement. 
 
Use of India Stack – The use of India Stack for Identity (Aadhaar) and payments (UPI) is set to fuel innovation in the fintech sector. Investing through machine learning and AI will have the capacity to reach millions of taxpayers and bring them on board easily and with low cost means. Customers who want buy mutual funds, borrow loans, will be authenticated seamlessly via the aadhaar framework without having to go through paperwork or lengthy approvals. Those have suffered financial exclusion will now be brought online quickly. The government has an important role to play in this journey, It can offer incentives that encourage entrepreneurship in this sector and offer faster regulatory approvals. 
 
Roll out GST – 2017 will turn out to be a historic year for indirect taxes due to launch of GST. This presents immense opportunity for businesses to adopt technology as a means to achieve their objectives. Adoption of GST would lead to wider compliance and replace physical C-forms, VAT forms, state tax approvals and tax payments with electronic and digital forms and payments. We hope the government will stay on course with GST, allowing only very necessary exemptions and offering incentives to small businesses to adopt technology. 
 
Reform tax laws – The finance minister must make use of comfortable majority in the house to bring in simplification of tax laws. Some of the deductions are not relevant in today’s times. For example, children’s education allowance which stands at Rs 100 per month for maximum two children or hostel allowance which is exempt up to Rs 300 per month for maximum two children. Medical reimbursement that stands at Rs 15,000 is meagre in today’s times. Direct tax code may be considered for review once GST has been put in place. 
 <keyword id="6599769" type="UNKNOWN" weightage="20" keywordseo="Budget-2017">Budget 2017</keyword> is will be both historic and promising for India. 
 
 (This article is authored by Archit Gupta, Founder &amp; CEO ClearTax.com)

Expectations from Budget 2017 have increased post demonetisation. Here’s what the tax experts wish for

The healthy ministry and the World Health Organisation (WHO) say prices of tobacco products in India have not increased substantially over time and have, therefore, suggested a hike in taxes up to 40% in all tobacco products in the Budget 2016. 
 
A report by the health ministry and WHO, 'Tobacco Taxes in India: An Empirical Analysis', states that tobacco products have become cheaper than essential food items and there was a need to hike prices. 
 
"The relative wholesale price index (WPI) of all tobacco products (smoking and smokeless) show an increasing trend between 2005-06 to 2012-13, but this has been consistently lower than essential commodities like food items," the report revealed. 
 
But the study does not say about period between 2006 and 2013 and higher taxes imposed on cigarettes over the following two years. 
 
In contrast to the report by health ministry and WHO, the recent National Family Health Survey-4 covering 13 states and two Union Territories mentioned decline in consumption of tobacco products over the last decade. 
 
As per the government, the total economic cost attributable to tobacco use from all diseases in the year 2011 amounted to Rs 1,04,500 crore ($22.4 billion) in India, equivalent to 1.04% of GDP.

Health ministry wants you to stub that ‘sinful’ cigarette out! Expect hike in sin tax by 40% in Budget 2016

The Prime Minister Narendra Modi-led government will present the union budget for 2016-17 on February 29. 
 
The pre-budget consultations are being also held in a bid to formulate policies. 
 
Meanwhile, the National Association for Software and Services Companies (NASSCOM) says direct and indirect taxes hurt startups and the industry body has asked for tax exemptions for startups. 
 
NASSCOM, in pre-budget recommendations, has asked the finance ministry to weed out taxes, including minimum alternative tax, angel tax as these hurt startups. 
 
"Policy regulations like ease of compliance, reliance on self-certification instead of audits, tax exemptions for startups will allow entrepreneurs to devote their time, energy and resources to build upon their innovative ideas," said R Chandrashekhar, president of NASSCOM. 
 
The industry body also wants exemption from capital gain tax on income from sales of startups.

India to present Union Budget on Feb 29

Currently, one-third of India's population reside in cities and it is estimated to go up to 50 per cent by 2030. There is a steady rise in the number of households with a shift towards nuclear families and increased urbanisation. The 66 per cent young population - below 35 years of age, are emerging as young millennial borrowers of home-loans. It is also true that home-loans market is driven by young borrowers within the age group of 26-35 years - about 25 per cent and also by people in the age group of 36-45 years - about 28 per cent. These are all active home-loan audience and jointly account for 53 per cent of annual originations. The average ticket size of a home-loan of young borrowers has continued to increase over the last 5 years, with a CAGR of 6.2 per cent. The ticket size continues to increase more for women than men. The cumulative active home-loan base of these borrowers has seen continuous growth over the last 3 years at a CAGR of 3.5 per cent. These young borrowers have been the reason for change in the home-loan market. Within the affordable segment, volume growth in home-loans of Rs 15-35 lakh, over the last 4-5 years, indicate shifting preferences of buyers towards higher ticket sizes. Rural Housing demand for mid-range and higher ticket sizes has continued to increase over the last 5 years too. Share of annual originations (volume) of Rs 35-75 lakh ticket size has increased by 4 per cent in the last 5 years. Share of annual originations of Rs 75 lakh plus ticket size has increased from 0.37 per cent to 0.87 per cent in the last 5 years. Share of annual originations of Rs 15 lakh ticket size has declined over the last 5 years, largely due to falling demand for very small ticket size segment of Rs 2 lakh. The dearth of disposable income has been a deterrent factor for salaried class towards taking home-loan and buying real-estate. Since the input cost in real-estate has increased the rates, the salaried class is left with no other option but to approach for home-loans from financial institutions. Interestingly, the tenure of repayment of home-loan is fluctuating between 11-30 years. There is also a deterrent factor for salaried class in home-loans and EMIs. The EMIs are no more supportive since the financial institutions first draw larger part of interest in the EMIs and principal component is kept less in more than first 50 per cent of the EMIs. As the EMIs near completion, the interest component becomes negligible and principal component is much higher. Even if the buyer has the provision of pre-payment of home-loan, he ends up paying the larger portion of principal amount rather than saving on the interest. Further, the financial institutions also levy heavy fees on pre-closure of loans. In case the buyer opts for higher tenure for loan repayment, it then makes it difficult for the buyer to invest in second property. One question that has been asked frequently is - "If the principal and interest amount are predefined, why the EMIs can't have equal amount throughout the tenure." Coming to tax benefit, repayment of principal amount in a home-loan qualifies for deduction under section 80C, which has an upper limit of Rs 1.50 lakh per annum. Since the same section - 80C, accounts a number of other investments including PF, PPF and life insurance policies etc, it becomes impossible for a buyer to take advantage of any benefit out of this section. Buyers are looking forward to increase in this limit in Union Budget-2022 since this limit has not been increased in last many years. On the tax benefit for interest payment, since under section 20(b) of the Income Tax Act, there is a cap of Rs 2 lakh per annum on the interest part of the home-loan, home-loans being larger in size, the buyers are unable to take much benefit of the same too. To extend tax benefit to the buyers the government has also added few sub-sections 80EE, 80EEA under the Income Tax Act but the volume of loan is not allowing buyers to gain desired additional benefits out of these sub-sections. What perhaps needed in the Union <keyword id="10547300" type="General" weightage="20" keywordseo="Budget-2022" source="Orion">Budget 2022</keyword> is to bring dynamic changes in the income-tax slabs and increase the rebates under section 80C, 80EE, 80EEA and 24(b) of the Income Tax Act. One of the greatest philanthropists <keyword id="310500" type="General" weightage="20" keywordseo="andrew-carnegie" source="Orion">Andrew Carnegie</keyword> said - "Ninety percent of all millionaires become so through owning real-estate." Andrew Carnegie is one of the five people who built America, the other four being Cornelius Vanderbilt, John D. Rockefeller, J.P. Morgan, and <keyword id="6629386" type="General" weightage="20" keywordseo="henry-ford" source="Orion">Henry Ford</keyword>. Harv Eker, an author and businessman, known for his theories on wealth and motivation said - "Don't wait to buy 'real-estate', buy real-estate and wait". These two statements said all about owning real-estate and what it could mean to a buyer. Globally, investment in real-estate is directly related to the future of a buyer and also growth of the economy, and so be in India. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/investment/news/budget-2022-could-consider-levying-tds/tcs-on-crypto-trading-make-it-reportable-in-sft/articleshow/88943733.cms">Budget 2022 could consider levying TDS/TCS on crypto trading, make it reportable in SFT</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/careers/news/570-job-openings-at-indian-oil-corporation-for-freshers-who-havent-graduated-yet/articleshow/88948126.cms">There are 570 job openings at Indian Oil Corporation for freshers who haven’t graduated yet</a>

Budget 2022: Expectations for hike in tax deduction on home loans

Mumbai, Jan 23 () India Inc is banking on the budget to see a reduction in personal income tax to revive the sagging consumption demand after getting the biggest tax break by way of a steep reduction in corporate tax rates, says a pre-budget survey. 
 Finance Minister Nirmala Sitharaman will increase the income tax exemption limit from Rs 2.5 lakh per annum currently, majority of respondents surveyed by tax consultancy firm KPMG opined.
 The majority of respondents also feel that the government in the forthcoming Budget to be unveiled on February 1 will increase the standard deduction and give more incentives for housing loans. 
 The government had slashed corporate tax rates to 25 per cent for old companies and to 15 per cent for new companies provided they are ready to forego all the existing exemptions. 
 Though the move was hailed by many as a booster dose to revive growth it has belied the expectation as growth has since then fallen to more than six-year low of 4.5 per cent in the September quarter from 5 per cent in the previous quarter.
 What more the advance estimate last week has pegged the full-year real GDP growth at 5 per cent while the nominal GDP growth at a 48-year low of 7.5 per cent, down from the budget estimate of 13 per cent.
 Also, most of the old-generation companies have decided to draw from the existing incentives and not to switch to the new tax regime.
 However, in the pre-budget survey involving 215 companies by KPMG India this month, more than half of the respondents plan to opt for the lower tax regime of 22 per cent by giving up available incentives from next fiscal.
 A majority of respondents also believe that the tax rate for foreign companies should also be reduced in light of tax cuts for domestic companies.
 A further stimulus by way of personal tax cuts is also anticipated.
"Majority anticipate the basic exemption limit of Rs 2.5 lakh for individuals will be increased. They also expect an increase in the income limit at which the maximum marginal rate of 30 per cent kicks in. If implemented, this can help spur consumer demand by complementing the interest rate cuts delivered since last year," says the survey.
 A majority of the respondents also believe that the finance minister will not introduce an inheritance tax. This is in line with the overall expectation, that there exists a need to provide a fiscal stimulus by reducing taxes on individuals.
 About 50 per cent of the respondents expect tax holiday for exports available to SEZ units to be extended to units set up beyond March 2020.
 Dispute resolution continues to be an area of concern for most companies with almost half of them believing that the approach of taxmen to tax disputes are not in line with international norms.
 While the dispute resolution panel is indeed a fast track mechanism to address international tax and transfer pricing disputes, almost half of the respondents believe that this mechanism is not meeting the stated objective of resolving disputes amicably.
 Just under 50 per cent of respondents believe that provisions dealing with the place of supply of R&amp;D, testing services and other performance-based services under GST are detrimental to services exports saying the exclusion is affecting the industry.
 According to Hitesh Gajaria, co-head of taxation practices at KPMG, the survey indicates that rate cut for individuals is the most wanted item by everyone. This is in line with expectations that lower tax rates for individuals, along with the corporates, will boost spending and investment.
 Companies are also hopeful of extension of tax holidays for exports to encourage more foreign inward remittances and continuing the weighted deduction for R&amp;D spend to encourage local manufacturing, says the survey.
 Introduction of e-assessment scheme last year to minimise the interface between taxpayers and the tax administration is seen as a welcome move, with many respondents believing that this will lead to greater transparency and efficiency. BEN BKS CS MR
MR

India Inc expecting budget to lower personal income tax rates

If you are going to buy shares for the first time, you can expect some respite when <a href="http://www.businessinsider.in/searchresult.cms?query=arun+jaitley&amp;sortorder=effectivedate">Finance Minister Arun Jaitley</a> announces <a href="http://www.businessinsider.in/searchresult.cms?query=budget+2017&amp;sortorder=effectivedate">Budget 2017</a> on Feb 1. 
 
In a bid to encourage more people to move towards <a href="http://www.businessinsider.in/searchresult.cms?query=stock+market&amp;sortorder=effectivedate">Indian stock markets</a>, Indian government may announce tax breaks for first time direct equity investors. As per several reports, it is also likely that Jaitley may announce a new scheme in this regard or tweak the existing Rajiv Gandhi Equity Savings Scheme (RGESS) for attracting investment. 
 
The new or modified scheme will be under Section 80 (C) plan that will be likely be announced in the budget for 2017-18. 
 
Jaitley may raise tax breaks offered on money in a pool of savings instruments such as fixed deposits, insurance premium and mutual funds from Rs 150,000 to above Rs 200,000 a year. 
 
Presently, households enjoyed tax breaks on equity-linked savings schemes (ELSS) of mutual funds within the overall Rs 1.5 lakh limit under Section 80C of the Income Tax (I-T) Act and under 80CCD for National Pension System contributions up to Rs 50,000 a year. 
 
Meanwhile, RGESS may be tweaked as the scheme has not many takers due to complexity. 
 
Only new or first time retail investors with an annual gross income of less than Rs.12 lakh are eligible to invest in the scheme. 
 
The scheme also comes in with lock-in period of three years, with a fixed lock-in during the first year followed by a flexible lock-in for subsequent two years.

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