Mr.
A K Gautam is an Ex-IRS belonging to 1977 batch of Indian Revenue Service and
is senior partner in A K Gautam Consultants, based out of Mumbai and Delhi
handling Income Tax/Benami Act and related matters.
Budget 2021 - Direct tax proposals from taxman’s perspective
In the last few years, the focus has been in the direction of moving to
a logical tax compliant regime with procedural efficiency & efficacy, with
a view to reduce the burden on tax payers. The Government’s success in its
efforts is evident from the fact that direct tax revenues have grown
substantially and number of income tax return filers has now shot up to 6.48
crores. We were grappling with the fallout of
the pandemic and therefore, experts and common man alike, expected the FM to
raise taxes or introduce a Covid cess, to help fund the Covid-19 fight, but
nothing of the type happened. The Budget proposals did not contain any
surprises or shocks to the tax payer. While Income
Tax rates have remain unchanged, the 'get-well' Budget proposals lay
much-needed emphasis on steps to simplify and ease compliance for tax payers.
Hon’ble FM proposed a couple of clarificatory and procedural changes in the Memorandum relating to Direct Taxes. Showing concern for senior citizens, she proposed to exempt Senior citizens of 75 years of age and above and with pension and interest income only, from filing tax returns. Likewise, for cases where the returns are required to be filed, changes have been proposed to ease filing of tax returns and now, details of capital gains from listed securities, dividend income, interest from banks, etc. would be pre-filled in returns.
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It
is heartening to note that the benefit of additional relief for homebuyers has
now been extended on home loans till March 2022. At the same time and to
provide impetus to industry, the Tax holiday for affordable housing projects
has also been extended till March 2022. To further support the start-up
ecosystem, the tax holiday for start-ups incorporated till March 31, 2022 have
also been made eligible for the tax holiday and in this connection, the capital
gains exemption on sale of specified personal assets by promoters for
investment in eligible startups has also been extended till March 31, 2022 subject
to certain conditions.
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However, Hon’ble FM
deserves full marks for the radical changes on procedural front. For simplifying
procedures, reduce bottlenecks and minimize litigation and in line with the
objective of reducing human interfaces, the Budget proposes to reduce the time
limit for completion of assessment proceedings to 9 months (from current 12
months) effective AY 2021-22 and a proposal for corresponding reduction in time
limits of filing revised and belated tax returns. This would expedite the
finality of proceedings and would be beneficial to both sides. Further, with an
intent to reduce litigation & uncertainty for taxpayers it also proposes to
reduce time limit for re-opening of assessment from existing 6 years to 3
years. However tax evasion cases, with evidence of concealment of income of Rs.
50 lakh or more in a year can now be
re-opened up to 10 years, with approval of designated authority.
While Faceless Assessment and Appeal mechanism is already in place, and
has been a great success, but a step in right direction and for further
reducing human interface is the proposal for a National Faceless Income Tax
Appellate Tribunal Centre with dynamic jurisdiction to impart greater
efficiency, transparency, and accountability. I also endorse the proposal to
set up Dispute Resolution Committee (‘DRC’), to provide quick and early
redressal and settlement of tax disputes to small and medium business owners as
against the current long drawn appellate proceedings.
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