Significant changes may be proposed in income tax and corporate tax structures in Budget 2015

NEW DELHI:Budget 2015 may propose significant changes in income tax and corporate tax structures, boost savings A revamp of tax slabs for individuals and incentives to encourage savings and investment in housing could be taken up as part of the package as the government is not just keen on giving some relief to the common man but also wants to provide a boost to financial savings.

The revamped national numbers show that the savings rate fell to 30% of gross national disposable income (GNDI) in 2013-14 from 33% in the year before. The exact quantum of relief is not yet known.

In its first budget, the government had raised the exemption limit by Rs 50,000 but tax slabs were left unchanged. Similarly, the Section 80 C limit that offers tax rebates for investments and on home loan interest payments were raised by Rs 50,000 each.Though muted tax revenue growth and the need to set aside more funds for development leave little room, the government is keen to improve consumer sentiment, which is now being regarded as a quick way to revive the economy.

There is limited scope for indirect tax reforms with the goods and services tax set to be imposed on April 1, 2016, compared with direct taxes, which have seen multiple changes over the past few years, rattling overall business sentiment.

The focus, another official said, will be on providing a healing touch by bringing clarity in some of the complicated tax provisions that have hurt the country’s image as an investment destination.

Industry views the upcoming budget as a make-or-break one and is looking to Jaitley’s effort to kick off an investment cycle. Companies want a stable and non-adversarial tax regime. Industry chambers including Ficci, CII and Assocham have also sought simplification of the tax structure.

Among the areas expected to be in focus are clarity in the minimum alternate tax (MAT) framework, an improvement in the dispute-settlement mechanism, tax clarity for real estate investment trusts and alternate investment funds in the form of tax pass through and cleaning up of provisions impacting infrastructure and manufacturing. The MAT rate is likely to be cut from the current 18.5%, if not for all companies, at least for those in special economic zones.

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SourceEconomictimes: