BackFinance minister Arun Jaitley hints at tax reforms in budget
Govt considering Shome and Easwar panels' suggestions on changes in tax regime, says finance minister
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A day after Prime Minister Narendra Modi reassured investors that India would not change tax laws retrospectively, Union finance minister Arun Jaitley seemed to suggest that the Union budget he will present on 29 February would have its share of tax reforms.
Speaking at the platinum jubilee celebration of the income tax appellate tribunal on Monday, Jaitley said the government is at an advanced stage of considering recommendations of the Parthasarathi Shome Committee set up to suggest changes in the tax regime to make it more taxpayer friendly.
He added that it is also looking at the recommendations of the R.V. Easwar committee set up last year to clean up the income tax Act.
The tax administration and reforms committee, or TARC, set up under Shome by the previous Congress-led United Progressive Alliance government, submitted its report in June 2014.
With a new government taking over, doubts surfaced over the implementation of the recommendations of the committee.
Jaitley’s comments on Monday indicate that the report is very much on the government’s agenda.
“Since we amend the income-tax Act every year through the finance bill, the act itself has become very complicated. There is a group under justice Easwar which is looking into cleaning up the Act. The Shome committee report has also given many recommendations which we are at an advanced stage of looking into. It has suggested many reforms in the tax administration itself," he said. “The law must be simple. Then, even if there are a large number of assessees, then the chances of litigation are at a minimum," he added.
Jaitley’s comment suggests that some of the recommendations of both committees may find a place in the Union budget to be presented on 29 February.
The Shome report proposed a complete revamp of the dispute resolution mechanism, widening the use of the permanent account number, or PAN, and spending 10% of the tax department’s budget to improve taxpayer services.
It called for the abolition of the post of revenue secretary, setting up of a tax council to develop a common tax policy and legislation for both direct and indirect taxes and merit-based promotions of officials in the tax administration.
Critical of the tax department, it said the department’s singular objective of protecting revenue without accountability for the quality of tax demands has severely affected the investment climate in India and pointed out the absence of customer focus and the lack of accountability among tax officials.
It also suggested that for large taxpayers, services should be provided by the Central Board of Excise and Customs and the Central Board of Direct Taxes under one umbrella.
The Easwar committee, which submitted its first draft earlier this month, sought the overhaul of certain provisions in the income tax Act that were causing unnecessary litigation and harassment to tax payers. It recommended rationalization of tax deducted at source provisions, capital gains provisions and rules relating to refunds.
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