Let us inform you one fascinating reality — The government is organizing to provide tax relief to Work from Home workers. This acronym was born in the Covid pandemic. It has been one year of lockdown. Industries and offices have been shut down. However, a majority of workers in India are not permitted and also are not prepared to go back to workplace. So, the future of work is going to be hybrid.
Consequently, the government is considering a lot about how to provide tax exemption to the workers who are working from home for the welfare of society.
In lots of circumstances, it has also come out that some employers have supplied allowances, reimbursements and furthermore assets to their workers to meet specifications.
So, in circumstances exactly where the employers have supplied such allowances to meet these added expenditures, the aforesaid allowances are taxable in the hands of workers. The purpose getting, the lack of precise exemptions in the tax laws.
The government could believe more than supplying deductions for expenditures that have been incurred by salaried workers who are working from home in the forthcoming Budget as it would increase demand.
The expenditure which they are incurring and bearing although working from home would have been incurred in workplace and borne by the employer had the workers worked in the workplace. If you permit these expenditures for deduction in tax, it shall leave more cash in their hands. This is fair sufficient and can be performed by the government.
Such a measure, if taken and implemented by the government, would be “reasonably equitable” for the reason that if companies have to sustain that expense, then that would have been a deductible expenditure in their books.
It simulates an atmosphere of transferring cash in the hands of these people (who are working at home) by supplying a deduction/concession for the COVID-connected expenditures and a handful of thousand bucks in their hand per month can contribute to the creation of demand in the mechanics of the economy.
In the last two years the government has come out with an amnesty scheme for excise and service tax followed by “Vivad de Vishwas” scheme for settling direct tax disputes.
Customs, for the imposition of the duty, was not viewed as earlier and this could be an apt time to get an alike scheme and consequently permit the market to payment of disputed tax and if you relieve penalty, you could be capable to gather the funds in the domain of Rs15,000-20,000 crore.
If the authorities want to gather an added quantity of cash and in return bear the expenditures for vaccines, then the impact would not be restricted to a handful of goods and would be broad-based. Moreover, it would be applied contemplating the base worth and not tax element.
(By Amit Gupta, MD, SAG Infotech)