Daijiworld Media Network - New Delhi

New Delhi, Jan 10: The government should consider raising tax relief for salaried individuals, easing compliance timelines and introducing measures to improve the ease of doing business in the forthcoming Union Budget, according to a report by KPMG India.

Among the key expectations outlined in the report is an increase in the standard deduction for salaried employees to Rs 1 lakh. The advisory firm also recommended extending the deadline for filing revised or belated income tax returns, particularly to support taxpayers with cross-border income and investments.

The report noted that individuals with overseas income often face challenges because tax filings in either their home or host countries may not be finalised within the Indian tax timeline. This can result in inadvertent under-reporting or over-reporting of income. Providing additional time for revised or belated returns would help address these complexities, it said.

KPMG also suggested allowing housing loan interest deductions against salary income, even for self-occupied properties, under the new tax regime. Highlighting the financial pressure of home loan repayments and the policy objective of encouraging home ownership, the report said such a provision would offer meaningful relief to taxpayers.

On corporate taxation, the firm called for greater clarity and relief for foreign companies operating under presumptive tax regimes. It recommended exemptions from the minimum alternate tax (MAT) in cases where incidental income arises alongside core business income, such as in shipping, civil construction or oil exploration.

At present, incidental income can expose foreign companies to MAT, creating tax uncertainty and compliance challenges. A clear exemption, the report argued, would enhance India’s attractiveness as a business destination for foreign enterprises in these sectors.

The report also flagged ambiguity in the tax treatment of redemption premiums on debentures. While courts have, in some cases, classified such premiums as interest, Section 76 of the Income Tax Act treats them as short-term capital gains. This inconsistency creates uncertainty for both issuers and investors, affecting tax calculations and withholding requirements.

On the indirect tax front, KPMG recommended allowing provisional refunds in cases involving an inverted duty structure. Such a move, it said, would speed up refunds, improve cash flow for businesses and reduce delays through a risk-based assessment framework.

Overall, the report stressed that targeted tax relief and procedural clarity in the upcoming Budget could provide a boost to taxpayer confidence and strengthen India’s business environment.