Budget 2020: India Inc favours increase in standard deduction, incentives for housing loans

Majority of respondents surveyed indicated that the Union budget 2020-21 will observe an increase in tax exemption limit to Rs 2.5 lakh per annum.

Mumbai: Ahead of the Narendra Modi's government first union budget presentation in the Lok Sabha on February 1, India Inc expects a reduction in corporate tax rates, according to a pre-budget survey.

The pre-budget survey states that the majority of respondents felt that the government in the forthcoming Budget will increase the standard deduction and give more incentives for housing loans.

Majority of respondents surveyed indicated that the Union budget 2020-21 will observe increase in tax exemption limit to Rs 2.5 lakh per annum. 

The government had slashed corporate tax rates to 25 percent for old companies and to 15 percent for new companies provided they are ready to forego all the existing exemptions.

In the contrary, a majority of the respondents also believe that the new budget 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.

"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 percent kicks in. If implemented, this can help spur consumer demand by complementing the interest rate cuts delivered since last year," as quoted by PTI.

About 50 percent of the respondents expect tax holiday for exports available to SEZ units to be extended to units set up beyond March 2020. MOst of the companies opined the approach of taxmen to tax disputes are not in line with international norms, therefore the dispute resolution continues to be an area of concern. 

As per the survey conducted by KPMG India involving 215 companies, more than half of the respondents plan to opt for the lower tax regime of 22 percent by giving up available incentives from the next financial year.

Other than the tax exemption, multinational companies are also hopeful of extension of tax holidays for exports to encourage more foreign inward remittances along with continuing the weighted deduction for R&D spend to encourage local manufacturing. 

(With agency inputs)