Indian Union budget 2021 – Expecting a new beginning, hoping for a better world

The Indian Union budget 2021 is coming at such a time when there is already a new hope after the vaccination drive has started across the globe.

While we all know that economic packages and initiative announced by the present government in year 2020 have kept the economy in shape, I believe that the first and foremost objective of budget 2021 should be that government takes all the possible steps to improve the disposable income of consumers and to help those who has been affected the most because of the global pandemic called “Corona”. We all know that an economy can grow only if all the components and all the sectors grow together.

Expectations for individuals

Increasing limit under Section 80 D – Corona has impacted everyone, and medical coverages are found to be inadequate for individuals and families, deduction under section 80 D for senior citizens to be increased from Rs50,000 to Rs75,000 and for others to be increased from Rs25,000 to Rs50,000.

Deduction for Work from home (WFH) set up – We all know that Covid-19 has brought an unbelievable shift in work from home culture. In many cases, companies have made work from home mandatory. In such cases, an additional deduction or relief should be given to such employees apart from the normal standard deduction.

Residential Status for AY 2021-22 – In FY 2019-20, due to restrictions on travel in and out of country, government notified exemption of a particular period not to be considered while determining residential status. We expect that similar notification should also be issued for FY 2020-21 providing help or relief for stranded individuals on account of the pandemic.

Reconsideration of long-term capital gain tax on equity and mutual fund investments – Retail investors plays a pivotal role in investments in equity and mutual funds markets. To boost investments and pumping money for long term into Indian markets, there should be relaxation in tax exemption limit (if not exempted fully) which is currently Rs1 lakh, after which it is taxable at rate of 10 per cent and indexation benefit is also not available.

Expectation from industry sectors

Education: We all have seen paradigm shift in the education sector. While the National Education policy of 2020 foresees to transform India into a ‘global knowledge superpower’, but the government must do a lot to make this a reality. More and more investments must be encouraged in EdTech’s and online education. The government should encourage research and development and investments in networks, infrastructure to bridge the digital divide across the country and to impact globally.

Real Estate: According to Knight Frank-FICCI-Naredco quarterly survey, first time in 2020, the ‘Current Sentiment Score’ of the Real Estate Sentiment Index entered the optimistic zone, jumping 14 points to 54 in the quarter. A score of above 50 indicates ‘Optimism’ in sentiment. Many analysts are of the view that this change is because of optimism in sales. This may be result of decrease in stamp duty by many states. However, there are many hopes from the Union Budget from the real industry sector to fulfil their long outstanding demand of providing “industry status” reduction in GST etc. “Industry status” will help increase the borrowing capacity of the developers, loans will be available at cheaper rates and increase liquidity can kick start stalled projects.

Healthcare 
Covid-19: The Covid-19 has suddenly brought health and healthcare as the focus of our lives. We all are aware that healthcare infrastructure is under tremendous strain in India. Therefore, the healthcare industry needs immense support for sustainable growth. Some of the expectations which this industry includes focus on preventive care and wellness, expand health coverage insurance to include pandemics, incentivise private investment in healthcare infrastructure, PPP projects, investing in increasing skill set of healthcare manpower, focus on mental stress, more relaxation in GST on healthcare products and services.

Expectation from Non- resident Indians

Non-resident Indians (NRIs) remit more than $80 billion into the country. Given their efforts towards nation building, the expectations from forthcoming Budget to reward them with sops such as ease of compliance under the Income-tax Act, 1961 (the Act) and reduction in TDS rates, among other relaxations.

Clarity on number of days to maintain NRI status – Many NRI’s were stuck in India during Covid -19 lockdown because of losing their NRI status due to overstay. They expect a big relief from the government on residency rules. These norms were relaxed for FY 2019-20 and similar relaxation is expected now for FY 2020-21 so that they do not have to pay tax on their global income.

Special relief for NRI’s who lost jobs due to Covid-19.

DTAA benefit at tax withholding stage — It is expected that Section 192 be amended to expressly provide that benefit under the applicable DTAA shall be provided for while calculating TDS by the employer at the time of payment of salary.

Rental payments made to NRI by resident/ non-resident - Section 194-IB of the Income Tax Act provides for deduction of tax on rental payments made to residents at the rate of five per cent, as against a TDS rate of 30 per cent under Section 195. Further, the tenant also has the administrative burden of obtaining a tax deduction account number (TAN) for undertaking the tax compliance on the rental payments to an NRI landlord. NRIs expect that a similar provision as applicable to residents, be introduced, whereby the TDS rate is lowered, and relaxation is provided on the administrative front in the form of challan-cum-statement.

Anish Mehta is chairman of The Institute of Chartered Accountants of India, Dubai Chapter. Views expressed here are his own do not reflect on this newspaper’s policy.