Reportedly KPMG in India’s Pre-Budget survey conducted in january 2020 has tried to capture expectations of important stakeholders on key tax aspects of the budget. Over 215 respondents across sectors participated in the survey. Accordingly FM nirmala sitharaman will increase the income tax exemption limit from Rs 2.5 lakh per annum currently, majority of respondents opined in the survey. The Budget will increase the standard deduction and give more incentives for housing loans.
Furthermore the government had slashed corporate tax rates to 25 per cent for old companies and to 15 per cent for new companies provided they are ready to forego all the existing exemptions. Even though the move was hailed by many as a booster dose to revive growth it has belied the expectation as growth has since then fallen to more than six-year low of 4.5 per cent in the september quarter from 5 per cent in the previous quarter.
Perhaps what more the advance estimate last week has pegged the full-year real GDP growth at 5 per cent while the nominal GDP growth at a 48-year low of 7.5 per cent, down from the budget estimate of 13 per cent and most of the old-generation companies have decided to draw from the existing incentives and not to switch to the new tax regime. Moreover in the pre-budget survey involving 215 companies by KPMG india this month, more than half of the respondents plan to opt for the lower tax regime of 22 per cent by giving up available incentives from next fiscal.