India’s top tax experts have proffered a budget wish list ranging from allowing flexibility on Covid-19 related expenses to taxation on economic profits and reducing long-term capital gains for startups to aligning with global tax rates to boosting M&A activity.

Industry experts say that there have been various hiccups for several companies, and the government could come up with some tax-related leeway to boost economic growth further.

The first expectation from corporate India is for tax deductibility of expenditure on Covid, said Dinesh Kanabar, CEO, Dhruva Advisors, a tax advisory firm. The government had earlier refused to permit the deduction of CSR expenses.

“Given that working from home has become almost a permanent fixture, expenditure incurred by corporates in giving allowances to employees to facilitate working from home should be tax deductible and such allowances should not be taxable in the hands of the employees. With increasing inflation, there is a need to revisit the standard deduction for salaried employees,” said Kanabar.

The government could also look to reinstate a 200% weighted deduction for in-house R&D expenditure, said tax experts.

In the last few years, the government has put special focus on large changes on the taxation side.

The rate of tax on corporates has gone down to 15% for new manufacturing companies and to 25% for those corporates who do not avail of tax incentives.

“We saw the retrospectivity on capital gains on indirect transfers being removed. We moved on to faceless assessments and appeals and so on,” said Kanabar.

Many tax experts say that even some incremental changes could go a long way, as many companies continue to struggle with the Covid pandemic and the disruption caused by it. “The concept of group taxation should be introduced by the government. The financials of companies under the same group should be consolidated for paying taxes in India,” said Sanjay Tolia, tax leader, PwC India.

As of now, India taxes companies individually. There is a fear that allowing group taxation could lead to lower tax collections.