27 Pre-Budget Suggestion on Union Budget 2022

National Chamber of Industries & Commerce, U.P. has made a representation to Hon’ble Union Minister for Finance and made 27 Suggestion related to Union Budget 2022. Suggestion includes request for Rationalization of Rate Of Tax On Firms/LLP, Enhancement of Section 80C Limit,  Allowability Of CSR Expenditure, Amendment To section 54 to Incorporate More Than One House, Social Security Package For Tax Payers, Increase in Standard Deduction For Salary Class etc.  Full text of the representation is as follows:-

NATIONAL CHAMBER OF INDUSTRIES & COMMERCE, U.P.

NCIC/24/2021-22/ | Dated: 14th December 2021

To,

Smt. Nirmala Sitharamanji,
Hon’ble Union Minister for Finance Govt.Of India
15 Safdarjung Road
New Delhi

Subject- Pre-Budget Memorandum

Hon’ble Madam,

This is to bring to your kind notice that National Chamber of Industries and Commerce, UP, Agra is an apex federal and registered body in Western Uttar Pradesh since 1949(i.e. 73 years old), which works in the interest of industry and trade. More than approx. 1600 reputed industrial and commercial establishments are associated with this institution as members, which are located in Agra and adjoining districts/cities. About 25 associations are also attached to this Chamber as affiliated organizations. The members of this Chamber who are experts in their field with deep experience are nominated by the State and Central Government in various advisory committees and the suggestions made by them are considered by the Government in policy formulation.

We are submitting before You this Pre-budget Memorandum, for Your kind consideration as follows:-

1) Tax Slabs Should Be Revised

Though the Government has given the option of 2 tax regimes (old and new) to the tax payers to choose as per their desire, but most of the tax payers are still opting for old regime only.The new tax regime, should be made more attractive, the basic exemption limit of tax also needs revision seeing the inflation trend and covid crisis.

2) Rate Of Tax On Firms/LLP S Needs Rationalization.

The existing rate of tax on firms/LLP is more than corporate tax rate therefore, it is suggested that the rate on Firm/LLP should be reduced.

3) 80C Deduction Limit Should Be Enhanced

Seeing the pandemic that we all have gone through, savings are necessary for the people as we don’t have any social security also. Limit of 80C deduction should be increased.

4) Social Security Package For Tax Payers

In our country the income tax is paid by less than 3% of the population, it is necessary that the Government should come out with some kind of a social security package and the instrument for same can be given additional benefit u/s 80C. This is of utmost important looking at the present scenario, when Covid era is still prevalent.

5) Allowability Of CSR Expenditure

The spending of the net profits on Corporate Social Responsibility as per The Companies Act 2013, should be an allowable expenditure under the provisions of Income Tax Act 1961. In the previous budgets the Government has mentioned that CSR expenditure would not be allowed u/s 37 of the Income-tax Act, 1961. Owning to compulsion made by the Companies Act, 2013 it is suggested that CSR expenses should be allowable u/s 37 of the Income-tax Act, 1961.

6) Deduction Of Employee’s Contribution To Provident Fund Etc. – Section 43B

Deduction for employee contribution to PF should be allowed even if the employee contribution isdeposited after the statutory time limit but before the due date of filing the return of income, which has been changed in last year budget.

7) Taxability Of Unsold Flats In The Hands Of Real Estate Developers

In case of real estate developers, most of the developers have unsold stock which also includes a chunk of finished flats, apartments and units etc. Such unsold construed flats as per the specific exclusion to be provided in Section 22 of the Act would not attract tax under the head ‘income from house property’. Due to covid the real estate industry is suffering a lot.

8) Section 43CA Needs Reconsideration

The harshness of the provision of section 43CA, for real estate developers and general public at large, wherein sales consideration of the immovable property is substituted by circle rate should be mitigated by providing sufficient safeguards for the genuine transactions.

9) Proposed Amendment In Section 56

Section 56 of the Income-tax Act, 1961 brings to tax all such properties which have been purchased by Individuals & HUF at a price lower than the Circle Rate. This provision is causing genuine hardships as assessable value under stamp duty act in many states are not yet rationalized and far are more than the market value of property.

10) Non Taxability Of Genuine Inter-Corporate Loans And Advances As Deemed Dividend

Section 2(22)e of the Income-tax Act, 1961 considers certain transaction within the ambit of deemed dividend specially the ones done between the shareholder having more than 10% of the shareholding of the company. It is suggested that genuine inter corporate loans and advances should be deleted specifically from the said section.

11) Section 54 Should Be Amended To Incorporate More Than One House

Long-term capital gains deduction for investment in one residential house is available as per the provisions of Section 54 of the Income-tax Act, 1961. Looking at the current scenario and the living standards of the people of the country. The limit should be increased to 2 houses.

12) Claim Made During The Assessment Proceedings

It should be suitably clarified in the Act that the tax officer is duty bound to allow the legitimate claim of the taxpayer made before him during the course of the assessment proceedings and assess the total income/ loss after allowing the said claim.

13) Time Limit For Completion Of Appeals By Appellate Authorities

The Act does not specify any time limit within which the appeals filed before the appellate authorities must bedisposed of. This results in undue hardship and never ending litigation cost to the taxpayer

14) Rate Of Interest On Tax Refunds – Sec 244A

The interest for nonpayment of tax is charged at the rate of 12% whereas the interest given on refund to the assessee is merely 6%. Uniform rate of interest of either 6% or 12% p.a. both for refunds and tax dues payable by the Government and taxpayers respectively may be prescribed.

15) Standard Deduction For Salary Class

The standard deduction amount should be enhanced to at least Rs. 100,000 to ease the tax burden ofthe employees and keeping in mind the rate of inflation and purchasing power of the salaried individual,

16) Section 80TTA To Cover FDR Interest

At present deduction u/s 80TTA is provided of Rs. 10,000/- to individual and HUF who earn interest income from saving bank interest. It is suggested that the scope of the said deduction should be enlarged and should also covered FDR interest within the ambit.

17) Minor Child Income Exemption To Be Atleast 10,000/-

Under the provisions of Act the income of the Minor child is clubbed in the income of the parent. A deduction of Rs. 1500/- is received by the parent in whose income the income of the minor child is clubbed. It is suggested that the limit of exemption under Section 10(32) of the Act should be raised to at least Rs. 10,000 for each minor child

18) Enhancement Of Limits For TDS – Section 194C

As per the provisions of Section 194C the TDS has to be deducted if payments of individual transactions is Rs. 30,000/-.It is suggested that owing to the inflationary trends the individual transaction limit should be increased to atleast Rs. 50,000/- and the aggregate transaction limit also.

19) Agriculture Activities Carried By Corporate To Be Taxed

Though as per section 10 of the Act agriculture income is exempted from tax. It is suggested that many corporate are showing agricultural income in their books of accounts in order to changed their black money into white money. It is suggested that agricultural activities by the corporate should be suitably taxed.

20) Advance Payment Of Tax Limit -30,000 /-

It is suggested that the advance payment of tax limit from the current Rs. 10,000/- should be increased to Rs. 30,000/-

21) Sec 234E- Should Be Scrapped

Owing to a lot of litigation and also stay put in by many High Courts across the Country the fees charged u/s 234E for non filing of TDS statement should be scraped as it leads to double penalization of the offence by the assessee as interest is also charged for the same default.

22) 44AB- Increase In Threshold Limit From 5 Cr To 10 Cr.

This limit needs revisit as audit is necessary to curtail frauds and manipulations.

23) Reduction In Time To File Belated And Revised Income Tax Return Forms.

The time limit for filing belated/revised return has been curtailed to 31stDecember,of AY from the end of the AY. It will cause genuine hardship to taxpayers.

24) Newly added section 194Q needs reconsideration.

Though many clarifications has been issued but still section 194Q is conflict with compliance of existing section 206C(1H) and it is leading to unnecessary conflicts and will increase litigation in future.

25) Faceless proceedings in ITAT

The regime of faceless asessements and faceless appeals are still not settled and a lot of procedure and otherwise issues are cropping up.For the moment the concept of Faceless ITAT should be kept in abeyance.

26) Sec 44ADA- Limit Of 50 Lakhs Should Be Increased And Rate Of 50% Should Be Reduced.

For professionals the limit of 50 lakhs u/s 44ADA should be increased to 1 crores and the rate of tax should be reduced to 30%.

27) Rule 9B needs reconsideration

Rule 9B of income tax is leading to double taxation on firms and is in a way acting as hindrance for new entities to be set up in form of firms/LLP.This rule should be scrapped.

We have full confidence that Your Good Self would consider our aforesaid points.

Thanking you,

Yours sincerely,

(MANISH AGARWAL) PRESIDENT

(ANIL VERMA) CHAIRMAN – INCOME TAX CELL

(CA – PRARTHANA JALAN) MEMBER – INCOME TAX CELL

Download Full Text of Pre-Budget Memorandum