Budget 2024 : The government undertook the rationalisation of income tax slabs and launched a new tax regime in which tax rates were highly reduced, addressing a long-standing need in the last Budget, says Hiren Thakkar, Proprietor, Hiren S Thakkar & Associates Chartered Accountants.
In an interview with MintGenie, Thakkar said that in GST, there could be some rationalisation of rates because many basic necessity items are taxed at a higher band of 18 percent like health insurance premiums, ice-creams, biscuits, etc.
Edited Excerpts:
This is the last Budget of the existing government. What are your expectations from the coming interim Budget?
Budgets before elections are generally populist, and no drastic changes are expected. In my opinion, importance will be given to job creation, infrastructure spending, and areas focusing on women empowerment. I have two expectations; I hope that double taxation on dividends will be removed, and gold ETFs and silver ETFs will be covered under eligible investments under Section 80C of the Income Tax Act, 1961. It will boost the digitisation of savings.
Past interim Budgets have never announced any major tax reforms. Do you think things will be different this time?
No, because in the last Budget, the government undertook the rationalisation of income tax slabs and launched a new tax regime in which tax rates were highly reduced, addressing a long-standing need. In GST, there could be some rationalisation of rates because many basic necessity items are taxed at a higher band of 18% like health insurance premiums, ice-creams, biscuits, etc.
Do you think the recent incidents of attempted ship hijacking and frequent tensions between countries will affect the budgetary allocations to various sectors this year? If yes, which sector would likely be most affected?
I consider these incidents as temporary phenomena rather than conclusive ones. Therefore, based on such news, no changes are expected in budgetary allocations. However, it’s worth noting that freight costs have increased significantly due to a 20-day extension in travel time by using alternative routes. Despite this, the import-substitute theme may remain in focus for the government to boost domestic manufacturing and reduce dollar outflows.
India is witnessing a notable upswing in credit card usage, especially in travel financing. Given this trend, would you want the government to consider excluding international expenditures up to ₹7 lakh from the current 20 percent tax collected at source (TCS) in the forthcoming interim Budget?
In my view, the government is highly cautious about forex outward remittances, and they want to incentivise domestic tourism, expecting fellow Indians to travel within the country, so it is not likely. Additionally, our tax-paying ratio is small, as mostly 90% of individual income tax returns (ITRs) filed show nil tax payment. The government aims to track the level of income and foreign travels, possibly to detect tax avoidance.
Do you think the government should increase the tax exemption limit under Section 80C to alleviate salaried people’s concerns?
The government undertook the rationalisation of income tax slabs and launched a new tax regime in which tax rates were highly reduced, addressing a long-standing need, so, this issue is resolved now. No changes are expected.
What suggestions would you give to simplify the current tax filing process?
To start with, ITR filing time should be increased; the current due date of 31st July is impractical. As return filing starts only after 15th June (TDS returns of Q4 get processed, and only then are we able to see tax credit in 26AS), it gives a narrow time frame to file I-T returns with quality aspects.
Second, tax professionals are worried about changes that keep happening at the end moment multiple times.
Third, the I-T department keeps sending notices for high-value transactions even after returns are filed. Data is fetched from AIS (Annual Information Statement); this can be included at the time of filing returns. This AIS form is not static; information gets updated from time to time as numerous entities submit information as per their schedule.
Last but not least, refund issues must be handled well. In the previous year when the refund was issued in the same bank, the I-T portal often asked to update the bank account, resulting in refund failure. One thing I want to appreciate is the department is processing refunds at an extreme speed.
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Published: 19 Jan 2024, 05:37 PM IST
