From income tax to corporate tax, what experts from Deloitte expect from budget 2019

• The government is likely to come out with tax relief for the middle class in the form of some changes to the tax slabs in the budget
• It is unlikely that the finance minister will announce sweeping changes in the tax rates

NEW DELHI: Tax experts from Deloitte predict that in the forthcoming budget the government may bring in some changes to the income tax slab and also reduce corporate tax rates. According to the experts, the government is unlikely to bring in sweeping changes in the budget but may try to do a balancing act before the Lok Sabha elections. The budget session of parliament will begin from tomorrow and the budget will be presented the day after.

Deloitte India partner Divya Baweja on possible changes in personal tax:

• It is expected that the budget will neither be a regular vote-on-account nor a full-scale one.
• The government is likely to come out with tax relief for the middle class in the form of some changes to the tax slabs. It is unlikely that the finance minister will announce sweeping changes in the tax rates.
• It is, however, important to notify the tax rates because without notifying tax rates, the government cannot collect taxes during the intervening period—from April 1 to the next full-scale budget after the new government is sworn in.
• The budget may also formalise the decision to exempt from tax, the lump sum withdrawal of National Pension Scheme (NPS) from 40% to 60% at the time of exit.

Rajesh Gandhi, partner, Deloitte India on direct tax expectations:

• With the upcoming elections, the government will have to do a balancing act in the interim budget. For India Inc., one of the primary expectations, in line with the vision of the finance minister, would be a reduction of the corporate tax rate to 25% for all corporate taxpayers, irrespective of the turnover threshold.
• A reduction in tax rates on book profits i.e. MAT/AMT, which is only about 5% lower than the normal tax rate, should also be more than welcome.
• Various stakeholders are also looking forward to clarifications and certainty on issues such as taxability on the issuance of shares to residents (in case of start-ups) and non-residents at a premium and rationalization of prosecution provisions for foreign companies where tax liability has been duly discharged.
• With a view to providing more impetus to the growing economy, the government could consider extending the sunset clause for availing tax holidays for investing in infrastructure as well as promoting exports i.e. for special economic zones.
• The financial services sector would welcome a clear and certain tax regime for Category III Alternative Investment Funds, indicating taxability either in the hands of AIF or investors, as well as a clarification with respect to classification of income from transfer of listed securities held by AIFs for less than a year as capital gains.
• Further, an exclusion for non-resident directors of Indian companies who are not receiving any form of income/benefit from the Indian company from the requirement to obtain an Indian PAN would be one more step towards ease of doing business in India for MNCs.