New Delhi, Jan 10 (NationPress) The government ought to contemplate increasing the standard deduction for salaried individuals, extending the timelines for belated tax returns, and implementing various initiatives to enhance the ease of doing business in the forthcoming Union Budget, according to a recent report.

The analysis by KPMG India indicated that one of the primary expectations from the budget is a hike in the standard deduction for salaried workers to Rs 1 lakh. Furthermore, it suggests extending the deadlines for filing revised or belated returns to aid taxpayers meeting cross-border income reporting requirements.

The report elaborated, "In situations where individuals with cross-border investments and income file tax returns, the finalization of their home or host country’s tax obligations may not be completed, which can result in both under-reporting and over-reporting of income." This underscores the importance of providing additional time for revised or belated tax submissions.

KPMG also advocated for permitting housing loan interest deductions against salary income, particularly for self-occupied properties. "Given the substantial burden of home loan repayments and the intent to encourage home ownership, we recommend that the government permit these deductions under the new tax framework," the report noted.

On the corporate tax front, the document called for explicit exemptions for foreign firms under presumptive tax regimes and a minimum alternate tax (MAT) exemption when incidental income accompanies specified business income like shipping, civil construction, or oil exploration.

The existing regulations pose challenges when incidental income is generated alongside business income, which may expose foreign firms to MAT liabilities, the report highlighted.

Additionally, the report pointed out that in certain scenarios, courts have categorized redemption premiums on debentures as interest. Section 76 of the Income Tax Act treats redemption premiums on debentures as short-term capital gains, creating uncertainty for issuers and investors regarding the tax treatment of such income, impacting tax calculations and withholding responsibilities.

On the indirect tax side, the report urged for the approval of provisional refunds for cases involving inverted duty structures. This would facilitate quicker refunds, enhance liquidity, and minimize delays through a more risk-based approach.