As India inches closer to a Union Budget "like never before", working professionals continuing to work from home (WFH) and the companies that they work for will expect to see a policy directed towards them that incentivises clocking in from the comfort (or discomfort) of home.
With the coronavirus forcing India to go into lockdown in late March, a number of working professionals in the organised sector incurred significant expenses in the form of laptops and a stable internet connection and additional set up costs to make working from home easier.
What to Expect
The 2021 Union Budget could possibly introduce an exemption or a tax deduction for WFH professionals who incurred and continue to incur additional expenses as a result of the Covid-19 pandemic.
One can also expect the government to bat for investment in robust technology infrastructure in tier-I and tier-II cities to ensure a smooth workflow for WFH professionals, with offices of MNCs and other corporates unlikely to open in the near future.
Why WFH Relief is Needed
Consulting firm PwC India said that providing deductions for expenses incurred by salaried employees while working from home in the upcoming Budget is key as it looks to boost demand.
Addressing a pre-budget session, Pwc India senior tax partner Rahul Garg said demand creation is particularly focussed on money being given or left in the hands of the individuals.
"One clear thinking is at the level of small to medium taxpayer can we look at, in view of the Covid, a deduction to them particularly for salaried employees when they work from home.
"So whatever expenditure they are incurring working from home, which expenditure in the typical case would have been incurred in office by their employers if they were using offices to work if you allow that to be treated as giving them an entitlement for deduction and that saves tax for them. It will leave more money in their hands," Garg said.
Following the outbreak of Covid pandemic early last year, many companies adopted a work from home policy for their employees.
What Professionals Want
A vast majority of industry respondents expect that the standard deduction limit for salaried individuals could be enhanced from the existing Rs 50,000 in the Budget next week, a KPMG in India survey said on Wednesday.
As many as 250 respondents across sectors participated in the KPMG in India's pre-budget Survey 2021-22.
Most respondents (74 per cent) felt that an enhancement in the standard deduction on salary income from the existing limit of Rs 50,000 should be considered to provide relief to the salaried class,
About 57 per cent of the respondents felt tax-free allowances/perquisites for salaried individuals could be given in the Budget, keeping in mind work from home arrangement. While 39 per cent felt a separate deduction for medical expenses concerning Covid-19 treatment could be given in the 2021-22 Budget.
What about Commercial Real Estate?
However, realty firms and consultants felt that commercial real estate developers should be allowed to set off GST paid on inputs like cement from the tax liability on rental income to avoid double taxation and give a boost to the office market to help India maintain its advantage in various sectors like IT and startups.
Net office space leasing fell 44 per cent year-on-year during 2020 to 25.82 million sq ft across seven major cities as corporates deferred their expansion plans and adopted 'work from home' policy for employees because of the pandemic, according to a report by JLL India.
(With agency inputs)