Budget 2025 is anticipated to have income tax slabs simplified, residency rules streamlined, and compliance eased for taxpayers, aligning with the goal of Viksit Bharat.
Simplification of Income Tax Slabs and Rates
It is expected that the simplification of income tax slabs will be prioritized by the Government under the new tax regime. Compliance is complicated by multiple slabs and rates currently in place. A reduction in the number of brackets and rates is anticipated, making the new regime more attractive than the traditional old regime.
Residential Status Clarifications
Disputes are often led by the ambiguity surrounding the determination of residential status for Indian nationals and Persons of Indian Origin (PIOs) visiting India. This stems from the absence of a clear definition of “visit” under the Income Tax Act. It is possible that Budget 2025 will address this by introducing objective parameters to clarify whether an individual’s stay constitutes a visit.
Simplified TDS Compliance for Property Buyers
TDS compliance is made cumbersome for property buyers when the seller is a Non-Resident (NR). TDS must be deducted at higher rates, a TAN must be obtained, and e-TDS returns must be filed by buyers. A simplified challan-cum-statement process for NR sellers could reduce administrative burdens for one-time transactions.
Extended Timeline for Revised Returns
Currently, income tax returns can be revised by taxpayers only until 31st December following the financial year. This timeline creates challenges for those earning income overseas between January and March, as foreign tax filings are often completed after December. An extension of the revision timeline to at least 15 months post-financial year could address this issue.
E-verifications and filing convenience
Difficulties are posed for taxpayers residing abroad by the current e-verification process for income tax returns, especially for those without Indian mobile numbers or compatible banking services. The need for e-verification may be removed, and seamless online filing with instant acknowledgment may be enabled to simplify the process.
Valuation Rules for EV Perquisites
A defined perquisite valuation method for electric vehicles (EVs) is lacking in Rule 3 of the Income-tax Rules, 1962. With the increasing adoption of EVs by employers for senior staff, clarity and encouragement of sustainable practices could be offered by a dedicated valuation framework.
Overseas Bank Accounts for Tax Payments and Refunds
Challenges are often faced by non-resident taxpayers in remitting taxes or receiving refunds due to the need for active Indian bank accounts. The processes could be streamlined, and the needs of global taxpayers could be catered to by enabling tax payments and refunds through overseas bank accounts.
Budget 2025 is expected to bring significant changes that will simplify tax compliance and enhance taxpayer experience, with long-standing issues being addressed and alignment with India’s vision of economic growth and equity being achieved. (ET)