The Centre is mulling to introduce a coronavirus cess or surcharge in the upcoming budget to fund additional COVID-induced spending. According to various reports, the changes that the government could raise tax rates or introduce a Covid cess for high-income earners.
Reportedly, the Centre has undertaken preliminary talks on revenue-raising measures; however, a final decision will be taken closer to the budget.
In addition, the government is also planning to increase tax rates on long-term capital gains on the sale of property for owners of more than two houses; provide clarity on the determination of tax residential status for FY21 for individuals stuck in India due to Covid-19; make regulatory amendments for the adoption of new LTC scheme; amplify tax laws and ease of compliance for individuals by encouraging digitisation.
The COVID cess will, however, invite the wrath of the industry, which has asked that no additional taxes be levied as the economy is already under strain. India's GDP is estimated to contract by a record 7.7 per cent during 2020-21 fiscal as the COVID-19 pandemic severely hit the key manufacturing and services segments, as per data released by the National Statistical Office (NSO) on Thursday.
According to the Reserve Bank of India (RBI), India's economy is projected to contract 7.5 per cent in the current fiscal ending March 31, 2021, while the International Monetary Fund (IMF) and World Bank have estimated the contraction at 10.3 per cent and 9.6 per cent, respectively.
The economy contracted by a massive 23.9 per cent in the first quarter and 7.5 per cent in the second quarter of this fiscal on account of the COVID-19 pandemic.
India's economic growth stood at an estimated 4.2 per cent in 2019-20.
