COVID-19 has drastically changed the financial outlook of most countries around the world. Due to the restrictions and distancing guidelines in India, many individuals have been affected financially. This has prompted the government of India to lower deduction certificates and extend the relief until the end of June 2020. These considerations have created much relief for taxpayers in India as many were struggling to file their own taxes since many tax offices are shut down due to COVID-19.

Suggestions have also been made to the Central Board of Direct Taxes to increase the amount of tax that is paid by high income earners during this time to provide greater relief for those struggling financially. This proposition has included a proposed income tax hike of an additional 10% (from current rate of 30% to proposed rates of 40%) for the highest income earners in the country.

Higher income tax brackets would be for those who make at least 10 lakhs or 1 million Rupees annually. Additional high-income taxes would target those who are making more than Rs. 1 crore (approximately $127,000 USD annually), and an even higher wealth tax for those earning Rs. 5 crores (approximately $637,000 annually). The majority of those earning the highest incomes have still been able to continue to work from home throughout the coronavirus crisis. However, this has not been the case for the majority of India’s population, either because of the nature of their work which cannot be supported from telework, or because they do not have access to the technology supporting such an option.

Furthermore, the government may look at raising additional revenue by increasing taxes or surcharges for foreign companies operating in India, as part of a toolkit of options aimed towards limiting the financial burden of the country in the long run.

The future of the new tax proposals is still uncertain as the “Fiscal Options and Response to COVID-19 Epidemic” was recently submitted to the Central Board of Direct Taxes in April. This report also strongly emphasizes that only honest and compliant taxpayers should be provided assistance during this time. The report also highlights the necessity of determining a handful of projects that would be very impactful to reviving the economy in India. Any additional government funding available, it was proposed, should go towards those projects that would immediately stimulate and benefit the economy.