<p>New Delhi: The Union Budget 2025-26 should prioritise giving tax relief to common taxpayers by raising the basic exemption limit in the new tax regime and reducing compliance burden on small and medium enterprises, <a href="https://www.deccanherald.com/tags/ey">Ernst & Young</a> said on Wednesday.</p>.<p>The global consulting firm suggested that basic exemption limit in the new tax regime should be increased from Rs 3 lakh to Rs 5 lakh and tax rates should be reduced.</p>.<p> “I hope for a reduction in personal income tax, particularly for the lower-income groups, to provide relief and stimulate demand. For businesses, particularly SMEs, reducing the complexity of tax compliance is critical," said Sameer Gupta, National Tax Leader, EY India.</p>.Centre plans to simplify decades-old income tax filing rules in Union Budget.<p>Referring to the huge backlog of pending income tax cases, EY called for bolstering alternate dispute resolution mechanisms like Advance Pricing Agreements and safe harbours.</p>.<p>More than Rs 31 lakh crore, which is 9.6% of the country’s GDP, was locked in income tax litigation as of 2023-24.</p>.<p>“Reducing the pendency of disputes and avoiding disputes must be taken up on a priority basis. In this regard, other dispute prevention options like safe harbours should be made attractive. The current safe harbour margins are too high and should be rationalised,” EY said in a note.</p>.<p>As a part of tax law simplification exercise, in the previous budget TDS rate rationalisation was undertaken to a certain extent. To further simplify the entire gamut of withholding tax provisions, TDS rate structure could be divided into 3-4 broad categories with lower rates and a negative list, EY suggested.</p>.<p>“Among other reforms, defer TDS on interest earned on employee's PF contributions above 2.5 lakhs to the withdrawal stage for reduced compliance,” it added.</p>.<p>EY also called for clarifications on the perquisite valuation for EVs and clear guidelines for the taxation of cryptocurrency and non-fungible tokens (NFT), including the treatment of virtual digital asset (VDA) losses in the Union Budget 2025-26, which is scheduled to be presented on February 1.</p>
<p>New Delhi: The Union Budget 2025-26 should prioritise giving tax relief to common taxpayers by raising the basic exemption limit in the new tax regime and reducing compliance burden on small and medium enterprises, <a href="https://www.deccanherald.com/tags/ey">Ernst & Young</a> said on Wednesday.</p>.<p>The global consulting firm suggested that basic exemption limit in the new tax regime should be increased from Rs 3 lakh to Rs 5 lakh and tax rates should be reduced.</p>.<p> “I hope for a reduction in personal income tax, particularly for the lower-income groups, to provide relief and stimulate demand. For businesses, particularly SMEs, reducing the complexity of tax compliance is critical," said Sameer Gupta, National Tax Leader, EY India.</p>.Centre plans to simplify decades-old income tax filing rules in Union Budget.<p>Referring to the huge backlog of pending income tax cases, EY called for bolstering alternate dispute resolution mechanisms like Advance Pricing Agreements and safe harbours.</p>.<p>More than Rs 31 lakh crore, which is 9.6% of the country’s GDP, was locked in income tax litigation as of 2023-24.</p>.<p>“Reducing the pendency of disputes and avoiding disputes must be taken up on a priority basis. In this regard, other dispute prevention options like safe harbours should be made attractive. The current safe harbour margins are too high and should be rationalised,” EY said in a note.</p>.<p>As a part of tax law simplification exercise, in the previous budget TDS rate rationalisation was undertaken to a certain extent. To further simplify the entire gamut of withholding tax provisions, TDS rate structure could be divided into 3-4 broad categories with lower rates and a negative list, EY suggested.</p>.<p>“Among other reforms, defer TDS on interest earned on employee's PF contributions above 2.5 lakhs to the withdrawal stage for reduced compliance,” it added.</p>.<p>EY also called for clarifications on the perquisite valuation for EVs and clear guidelines for the taxation of cryptocurrency and non-fungible tokens (NFT), including the treatment of virtual digital asset (VDA) losses in the Union Budget 2025-26, which is scheduled to be presented on February 1.</p>