By Amarpal S Chadha
Employers and personnel require to be conscious of the compliance specifications, unintended violations/dangers they might trigger from a tax, social safety, immigration and employment law point of view, thanks to the unprecedented influence of the Covid-19 pandemic. Governments across the globe have taken cognisance of the involuntary more than-stays by people and the resultant exposures. Some nations like the US, the UK, Ireland, and so forth, have relaxed the recommendations to exclude the remain of people due to the pandemic even though figuring out their residential status. In India, the CBDT announced a relaxation in determination of the residential status of people who came to India on a stop by prior to March 22, 2020, wherein it mentioned that presence in India in the course of the specified period would not be regarded as for figuring out residential status for FY20.
The government has actively taken methods to shield the economy, and tax has played a considerable aspect. The “Atmanirbhar Bharat” stimulus package was announced to provide relief to a variety of sectors and drive India towards self-reliance. Some of the measures had been extension in timelines for filing tax returns, reduction in specified withholding tax prices, and so forth. In an try to increase expenditure the LTC Cash Voucher Scheme was introduced. While the nation is seeking to sustain financial activity, eventually, the debts and connected deficits will force the Centre to come up with income-raising policies.
The World Bank publication, Taxes & Government Revenue, states, “Taxes have a key role to play in making growth sustainable and equitable, especially in the context of the Covid-19 crisis”. It also states, “Collecting taxes and fees is a fundamental way for countries to generate public revenues… to finance investments in human capital, infrastructure…”. Hence, a powerful development-supporting policy framework is expected.
Countries like the UK and Australia have introduced particular deductions for added expenses incurred even though working from residence. The Australian federal price range for 2020 has also supplied tax breaks for these with revenue beneath a particular threshold. It will be fascinating to see what modifications the Indian government brings in the tax and financial policies. The modifications that the government could bring incorporate raise in tax prices/introduction of a Covid cess for higher-revenue earners raise in tax prices on lengthy-term capital gains on the sale of house for owners of more than two homes clarity on the determination of tax residential status for FY21 for people stuck in India due to Covid-19 regulatory amendments for the adoption of new LTC scheme amplification of tax laws and ease of compliance for people by encouraging digitisation.
The pandemic and its influence notwithstanding, the government has been going ahead with its agenda to implement 4 new labour codes. These codes, proposed to be effective from April 1, are anticipated to bring in simplicity, efficiency, ease of compliance and equity for all. The government will have to strike a balance maintaining in view the require to strengthen the country’s financial situation as properly as the harsh realities at ground level, due to the pandemic. One has to wait and watch what the new year will bring in!
With contributions from Ammu Sadanandhan, senior tax specialist, EY India
The author is Partner, People Advisory Services, EY India. Views are individual