New Delhi: It’s budget time again and the countdown to the 2022 Union budget has begun. India’s tax experts have drawn up a budgetary wish list ranging from flexibility on Covid-19 related spending to taxing economic profits and cutting long-term capital gains for start-ups in the future. alignment with global tax rates to drive M&A activity.

Industry experts say there have been various hurdles for several businesses and the government could come up with some fiscal leeway to further stimulate economic growth.

The main expectation of Indian businesses is the tax deductibility of expenses on Covid. The government had previously refused to allow the deduction of CSR expenses.

Dinesh Kanabar, CEO of Dhruva Advisors, a tax advisory firm, told ET: “As working from home has become almost a permanent feature, the expense incurred by companies to provide allowances to employees to facilitate the home work should be tax deductible and these allowances should not be taxable in the hands of employees.With the increase in inflation, there is a need to review the standard deduction for salaried employees.

The government could also consider reinstating a 200% weighted deduction for in-house R&D expenditure, tax experts have said.

In recent years, the government has placed particular emphasis on major changes in taxation. The corporate tax rate has been reduced to 15% for new manufacturing companies and 25% for companies that do not receive tax incentives, ET reported.

Experts say even some incremental changes could go a long way as many businesses continue to battle the Covid pandemic and the disruption it is causing.

India now taxes companies individually. It is feared that allowing group taxation will lead to lower tax revenues.

Many tax experts have even called on the government to remove tax obstacles for start-ups at a time when India is experiencing a boom in this field.

Currently, the tax system favors investments in public markets rather than private investments. Long-term capital gains (LTCG) on listed securities are taxed at 10% without indexation (with a higher mark-up capped at 15%). Contrary to the above, the LTCG on unlisted securities is imposed at 20% (with a higher surcharge of up to 37%),” Sudhir Kapadia, National Tax Officer, EY India told ET.

The government may also consider deferring ESOP taxation for employees of all “start-ups” at the point of sale of ESOP shares, Kapadia said.

Tax experts have also pointed out that the compliance burden for Indian businesses has just increased in recent years and that the government may try to reduce it without affecting their revenue.