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Union Budget 2021 Updates: Work from home may leave you with more money in hand

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Govt can look to provide tax deduction for employees working from home: Pwc India

  • The government could look at providing deductions for expenses incurred by salaried employees while working from home in the upcoming Budget as it looks to boost demand, consulting firm PwC India said.
  • Addressing a pre-budget session, Pwc India senior tax partner Rahul Garg said demand creation is particularly focussed on money being given or left in the hands of the individuals.
  • “One clear thinking is at the level of small to medium taxpayer can we look at, in view of the COVID, a deduction to them particularly for salaried employees when they work from home.
  • “So whatever expenditure they are incurring working from home, which expenditure in the typical case would have been incurred in office by their employers if they were using offices to work if you allow that to be treated as giving them an entitlement for deduction and that saves tax for them. It will leave more money in their hands,” Garg said.

Budget 2021 should rejuvenate India’s banking system

GoI should also take steps to rejuvenate public sector banks (PSBs) by bringing down its stake to below 50% through the market route over the next 12 months. This should be done for all except 3-4 financially strong banks such as the State Bank of India (SBI), Bank of Baroda and Union Bank. Further, steps like creating multiple bad banks, creating development financial institutions, and creating an agency for investigating financial sector frauds are much needed.

Healthcare on agenda?

With the Covid-19 pandemic having revealed India’s health infrastructure inadequacies, Sitharaman would do well to increase allocations for healthcare. The 2017 National Health Policy pledges to increase public spending for healthcare to at least 2.5% of GDP by 2022, from the current 1.5%. The budget must work towards this target.

Budget needs fiscal policies to boost private investment

The space gained by expansionary fiscal policy should be utilised to enhance capital expenditure targeted towards areas that have a high multiplier effect. GoI should fast-track existing infrastructure projects underway, rather than go for new ones. It should notify the shelf-ready projects, which are in the National Infrastructure Pipeline (NIP), for implementation. It would crowd-in private investment and kick-start a virtuous cycle of revenue, job-creation and private investment.

Budget 2021: Much needed fiscal support

The need for fiscal support to lift the economy is paramount. Hence, GoI should relax fiscal consolidation for a year, and announce a realistic fiscal deficit target for FY2022. Further, the deficit should be seen from the longer perspective of 3-4 years, and not be a one-year outlook. There is a need to go for a ‘fiscal deficit range’, instead of a fixed fiscal deficit target, as well as improve the quality of deficit by including off-budget liabilities, and ensuring greater transparency in bud ..

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