We all look forward to the Union budget every year in the hope of getting some tax breaks which can improve our in-hand income. This time, the hopes are much higher. With the gross domestic product (GDP) at 4.5% in the September quarter (the slowest in more than six years), the government is expected to boost consumption by putting more disposable income in the hands of people in the form of tax breaks. The government’s move to cut corporate tax rates in September 2019 was also seen as a measure to boost private investment in the face of the ongoing slowdown.
Whether the government gives in to a populist budget or remains committed to fiscal discipline remains to be seen. But apart from the lowering of tax liability, there are other areas that tax experts suggest the finance minister can fix.
Some of the major recent changes include introduction of standard deduction of ?40,000 in Budget 2018, which was hiked by ?10,000 in Budget 2019. Simultaneously, some allowances such as transport allowance and medical reimbursement were removed even as others such as leave travel allowance and children’s education allowance continued.
Allow belated ITRs
Experts also demand that taxpayers be allowed to file previous years’ ITR. At present, taxpayers can file a belated (late) return only till the end of the same assessment year.
“People should be allowed to file tax returns for the last several years if they want to come clean. There is currently no provision to file tax returns of past years, even after paying a penalty. There is a Section which gives discretion to the tax commissioner to let them file returns for past years, but the tax officer rarely allows it. If tax officers can go back four to six years and (in case of overseas assets) 16 years, taxpayers should also be allowed to go back if they discover a genuine mistake themselves," said Amit Maheshwari, partner, Ashok Maheshwary and Associates LLP, a chartered accountancy firm.
“Also, currently refund is allowed only in case ITR is filed; so this (allowing taxpayers to file belated returns) would be an additional benefit for taxpayers who intend to file," he added. Allowing filing returns of previous years will help increase the tax base as well.
It is likely that some provisions of the proposed Direct Taxes Code, which will simplify the antiquated tax laws, may see the light of day in this year’s budget.