Union Budget 2022: India Inc’s taxation wishlist

In her first year as Finance Minister, Nirmala Sitharaman initiated bold tax reform, lowering corporate Income Tax to 25% and a very competitive 15% tax rate for new manufacturing. Two years of Covid pandemic has left the economy fragile and government in difficulty, but with tax collections looking up, industry feels there is some room for the FM to offer some tax concessions. A look at the industry wish list:

For individuals….

Provide relief to the salaried class hit hard by the pandemic to increase income in hand & support demand


Measures :

For Businesses….

Stable tax regime is key at the current juncture with some tinkering to boost investments, provide relief

Measures:

1. Extend sunset date for tax benefit for newly incorporated companies to 2025 from 2023
2. Tax MSMEs, LLPs on par with the corporates.
3. Reduce customs duty on raw material, to check input cost and inflation
4. Offer concessional tax rate to companies investing in green technology
5. Provide tax holiday for electric vehicle, data centres
6. Reduce tax compliances
7. Provide clarity on taxation of hybrid annuity models

For Investors…..

There is a need for stability and continuity while removing some small irritants

Measures:

• Extend Concessional LTCG rate to investment in Startup
• Reduce holding period of REIT/InvIT to 1 year for long term capital gains
• Provide clarity on overseas listing; SPAC model
• Spell out the taxation regime on investment in Cryptocurrency

BUOYANT REVENUE COLLECTIONS PROVIDE ROOM TO PROVIDE SOME RELIEF

• Net direct tax collections for the FY22 have grown at a robust pace of over 60%
• Experts expect govt to exceed FY22 BE by about Rs 2.5 lakh crore

Collections for April-December 2021

Net Corporate Tax: at Rs. 5,15,870.5 crore

Net Personal Income Tax: Rs. 4,29,406.1 crore

Gross Direct Tax Collections: Rs. 10,80,370.2 crore