CA Himanshu Kumar

Union Budget 2016 is likely to focus more on rural spending, defense and housing.

According to my opinion Some proposed Direct Tax Changes should be :

  • Tax on Companies/ Firms/LLPs: Corporate Tax rate to be reduced to 25% from the current 30%. Further the same should be inclusive of surcharge and education cess.
  • Tax on Individuals: The slab rates for individual tax payers should be raised in order to bring them in parity to other countries of the world.
  • Inter-Corporate loans and Advances (Deemed Dividend): Adequate provisions should be made to ensure that genuine load/advances do not become taxable under Sector 2(22)(e).
  • Place of Effective management (POEM): CBDT should bring in more clarity through issuance of guidelines wherein determination of residential status, common policy applicable to company having Indian and foreign presence, place where key management and commercial decisions are made etc needs to be clarified.
  • Tax on Subsidies: Considering subsidies received from Central or State Government or any other authority or body as income and making
  • them liable to tax under Section 2(24)(xviii) defeats the objective of giving benefits to the tax payers
  • Expenses incurred under Corporate Social Responsibility (CSR): Currently expenses incurred under CSR are not allowed as deduction under Section 37(1) of the act. It is recommended that the same should be allowed as an expense while computing the taxable income of the company.
  • Enhancement of TDS deduction limits:
  • The TDS deduction limit under Section 194 C is INR. 30000 for a single transaction and INR. 75000 per annum. Also a limit of INR. 5000 has been defined under 194H for payment of commission. The same should be increased since it requires deployment of resources in terms of manpower, systems and other costs without providing any significant benefit to the revenue.
  • TDS on Transfer of Immovable property: The objective of bringing the aforesaid tax was to widen the ambit of tax net to the transferors. However the threshold limit of INR. 50 Lakhs is too low and puts a lot of onus on the sellers in terms of compliance requirements. Similarly a builder building a property will have a turnover of more than 1 Cr. which automatically brings him within the ambit of tax audit. It is recommended that either the section should be omitted or should be applicable to the secondary transactions leaving first transfer of property.
  • Transport Allowance: The limit of INR.1600 per month is quite nominal keeping in mind the raising conveyance cost and the same should be revisited to say INR 3000 per month.
  • Education allowance: The exemption limit of Rs. 100 per month needs to be considerably raised upwards, say to minimum of Rs. 1,000 per month to bring it in line with the rising inflation and cost of education.
  • Medical expenses: The current exemption limit of INR 15000 was revisited many years ago and the same should be revised to say INR. 50000 per annum.
  • Leave Travel concession: Currently the same is allowed for travel within India. We recommend that the same should be allowed for travel outside India as well as travelling abroad for holidays is quite frequent these days due to availability of low cost packages to the customers.
  • Deductions under Section 80C: We propose that the limit should be increased to say INR 200000 from the current INR 150000. As the same will allow individual tax payers to have more tax benefits as well as the Government to use that money for infrastructure development.

Like every year, the common man expects the Union Budget 2016 to leave behind more disposable income in his/her hands. The FM has the task of balancing the rising expectations and the fiscal deficit of the country, in the Union Budget 2016.

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