Chennai, Feb 21 (IANS) Making the tax administration tax-payer friendly and transparent, tax holiday for a certain period for businesses generating jobs, increase in tax exemption and deductible limits are some of the Budget expectations of business and common man with regard to direct taxes .
"The government has repeatedly shown its willingness to make the tax administration transparent in its functioning. It should take this process further forward by accepting and expediting the implementation of the recommendations made by the Tax Administration Reforms Commission (TARC) headed by Dr. Parthasarathy Shome," Rakesh Nangia, managing partner at the international tax advisory firm Nangia & Co, told IANS.
According to him, the TARC report addresses several key problems faced by Indian tax-payers and implementation of the recommendations will go a long way in making India an easy place to do business in.
According to Nangia, the recent draft report by Justice R.V. Easwar (retd.) provides detailed recommendations on the amendments required in law to cut down on litigation.
"The government is expected to accept a number of these recommendations by way of suitably amending the legislation in the Finance Bill," he said.
Union Finance Minister Arun Jaitley last month said the government is deliberating on the recommendations of the TARC.
Interestingly, the Shome panel had said that its recommendations have to be implemented in full and cherry-picking will not bring in the expected results.
The panel said the post of revenue secretary does not merit presence in the modern tax administration and should be abolished.
The Justice Easwar Committee appointed to examine simplification of income tax laws had recommended raising the threshold limits for deduction of tax at source (TDS) as also slashing the rate of withholding tax.
The panel said nearly 65 percent of the personal income tax collected in India was through TDS, whose provisions need to be made less "tedious", as they have remained over the years, and more tax friendly.
The committee proposed raising the threshold for TDS to Rs.15,000 from Rs.2,500 annually and reducing the tax rate to five percent for interest on securities.
For other interest earnings, it recommended raising the limit to Rs.15,000 from the present Rs.10,000 for bank deposits, and Rs.5,000 for others.
On Jaitley's last year's Budget promise of reducing the corporate tax rate by five percent to 25 percent over next four years, Nangia said the government may not have much headroom this year due to tax revenue shortfall.
He said there may be a token reduction of 0.50-1 percent in the corporate tax rates while the Budget may lead to clarity on the manner in which exemptions are to be removed.
"However, given the tepid growth in corporate earnings and the continuing weakness in the global economy, the government may not be overly aggressive in paring the incentives at this point in time," he added.
"The government could provide support to the industry by rationalising the levy of MAT (minimum alternate tax) on SEZs (special economic zones) and continuation of the incentives to SEZs and EOUs (export-oriented units) for some foreseeable future till the sector fully revives," he said.
The salaried class hopes that Jaitley will increase the basic tax exemption limit from Rs.250,000 to Rs.500,000 and also raise the limits on tax deductible investments -- life insurance premium, Public Provident Fund (PPF), National Savings Certificate (NSC), pension and others.
The common man also expects the government to allow higher deduction of interest on housing loan in respect of self-occupied property from the current Rs.200,000 without any other caps.
The common man would like the tax structure of the National Pension Scheme (NPS) to be reviewed so as to bring it in line with other retirement products.
"The current tax structure of National Pension Scheme is Exempt-Exempt-Tax (on maturity the amount is taxed), which is at a sharp disadvantage to the other major retirement products such as the Employees Provident Fund (EPF) and the PPF," Nangia said.
According to Tarun Chugh, the managing director and CEO of PNB MetLife India Insurance Company, the government should provide a separate limit for long-term savings and pensions under Section 80C of the Income Tax Act.
This website uses cookies.