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 on Thursday.
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.
Following the outbreak of COVID pandemic early last year, many companies adopted a work from home policy for their employees. Garg said such a measure would be “reasonably equitable” because if businesses were to incur that expense, that would have been a deductible expenditure in their books.
Today that deductible expenditure sits in the hand of the individual and therefore there is no tax base reduction or sacrifice of any revenue, he said.
“It creates a situation of shifting the money in the hands of individual by giving a concession or deduction in respect to COVID related expenses and they could look at few thousand rupees per month and every person who is employed can get deduction and tax relief in their hand and contribute to demand creation,” Garg noted.
