The Union Budget 2015 to be presented on February 28, 2015. The people of India from all walks of life have major expectations from the Government. The Tax-payers needs simpler and minimum direct tax laws and should give:
- Tax Policy Roadmap -To provide a stable and reliable tax regime
- Non adversarial and conducive tax environment
- Incentivise Growth
The following major issues also need to be addressed not only for large taxpayers but also more importantly for the common man:
- Harassment to tax payer – Negative approach of tax laws and department
- Corruption in tax administration
- High pitch assessment – With no responsibility on the officers. Even High Court/Tribunal Judgments are ignored
- Complex legal provisions
- Uncertainty – Anxiety among business class
The governance needs to be people centric and should ensure maximum governance with minimum government. A time bound delivery and leveraging technology for e-governance can bring suitable solutions. The government may consider following specific suggestions:
- E-governance: The entire interface between assessee and Income Tax Department including scrutiny, assessment, rectification, refunds and others can be completely managed electronically which should be monitored online by the top officials of the tax department to ensure time bound reply and the solution. The Finance Minister needs to take personal interest for effective, efficient & successful delivery.
- Mistrust: The tax law should itself provide for the trust of the tax department on the taxpayer. The various transactions undertaken by the assessee are to be prima facie accepted as genuine and acceptable to the department. Only the cases of tax evasion need to be dealt firmly with stiff penalties.
- GAAR: The provisions introduced in the Income Tax Act in respect of GAAR should be removed.
- Investment Incentive: The investment allowance need to be provided to SME also and can be increased to boost ‘Make in India’.
- Voluntary Disclosure: The assessees can be permitted to disclose income on an ongoing basis hereafter, without any need to explain the source. The declaration of assessee that the source is not from corruption or crime can be taken.
- Tax Slabs: Assessees having income less than Rs. 10,00,000 need to be taxed at 5% and 10% in two slabs rather than 10% and 20% as at present. The maximum marginal rate can be reduced to 25%.
- MAT: Benefit of carry forward losses including depreciation to be fully given in all stages before imposing MAT. Artificial disallowances in this regard need to be done away with. MAT on SEZ needs to be scrapped.
Expectations from Budget
- Domestic Transfer Pricing provisions have no relevance and are complicating the law without meeting any objectives.
- The provisions of Section 56 relating to taxability of real estate transactions on the basis of circle rates, taxability of share premium and deemed income on transfer of shares other than at book value are irrational and are unjustified. These provisions are seriously hampering businesses.
- Advanced Ruling cannot be restricted only to large domestic tax payers involving more than Rs. 100 crore. This should be extended to all assessee, being the constitutional right to equality.
- HUF: Hindu Undivided Family needs to be incentivized with higher exemption limits to promote joint family and old Indian culture. Special deduction for education per member below 25 years, health per member above 60 years, health and accident cover for all members and special allowance towards payment to senior citizens should be provided for as a deduction.
- Deemed Income: The taxation needs to be levied only on real income. The artificial rules including Taxable Income Computation Standards cannot be allowed to be different from Indian GAAP and international accounting standards based on historical cost Principles.
- Refunds: Large refunds are still not being given without persuasion and personal follow up. The system needs to take care and should ensure timely refunds, with time bound verifications of returns.
- Appeals: The appeals by department should be based on professional judgment. The legal judgment of even non jurisdictional ITAT and High courts, need to be binding on the department except in case, conflicting judgments are there.
- Scrutiny: The scrutiny assessment should be undertaken only in exceptional cases and limited to specific issues.
- Survey Searches & Raids: Needs to be only against the enemies of the country to unearth the money laundering and not for tax compliances.
There are many other important areas where complex provisions need to be withdrawn and simpler basis for taxation needs to be adopted.
It is important to see that no new taxes are proposed in the budget since we already have tax implication in every business transaction. Suggestions should be to manage and to cut expenditures. It should be ensured that the revenue, generated by the government by existing means, is deployed on productive revenues and creates assets for giving long term benefits with increased production & employment. All kinds of so called incentives/subsidies given away as populist measures need to be pruned. Let the direction aim at labour by the workforce instead of sitting & getting government grants.
We hope the Government will consider the above proposal for the budget for better growth.