Taxing the New Normal

Context: The forthcoming budget will need to consider changes induced after an unprecedented 2020.

Suggestions for the Tax reforms in the upcoming Budget: factoring in the Work from Home (WFH)

• While computers and laptops provided by the employed are not taxed, other assets like swivel chairs attract 10% tax.
  • The Finance Bill 2021 should amend Rule 3 (7)(vii) and provide that provisions of desks, chairs, internet installations and other assets that facilitate WFH will not be treated as a taxable perquisite.
• Owing to WFH, employees are bearing higher electricity charges; thus, a portion of the residential electricity bill should be reimbursed by the employer and treated as tax-free.
  • These favourable amendments to the Income-Tax (I-T) Rules will not cost the exchequer much,
• Services rendered by employees of SEZ units from their homes will be eligible for the tax holiday benefit.
• Boosting the real estates: Some state governments such as Maharashtra and Karnataka have cut stamp duties.
  • It is now possible to buy a residential house from a builder at 20% lower than the value arrived at as per the circle rate.
  • Providing concession on secondary sales: Due to loss of jobs and many preferring to work from home leads to unwanted selling of secondary houses.
    • Section 71 of the I-T Act provides for set-off of any loss arising under the head' income from house property'.
  • In any financial year, the loss under the head house property must be allowed to be set off in entirety, against any other head of income.