Finance Minister Arun Jaitley on Monday hinted at a simpler tax regime and said the Centre is examining the recommendations of the Parthasarathi Shome Committee on tax administration reforms.
Stressing that the “image of an oppressive tax man should not hover over us,” said Jaitley, who will present the Union Budget next month, simple tax laws will also help cut down litigation, reduce arrears and improve tax collection.
“The Shome Committee report has given several recommendations which we are at a very advanced stage of looking into. It has suggested certain reforms in tax administration,” he said at the platinum jubilee celebrations of the Income Tax Appellate Tribunal, adding that the Centre has also set up the RV Easwar Committee to simplify the Income-Tax Act.
The Shome panel submitted a set of four reports to the Finance Minister calling for time-bound refunds, avoiding retrospective amendments to tax laws, and streamlining of the tax administration.
The Easwar Committee, in its first report submitted earlier this month, has proposed rationalisation of the threshold and lowering of rates for tax deducted at source along with other amendments to tax laws to improve ease of doing business. Jaitley said that “laws must be simple, so even if you have a large number of assessees… if your laws are simple, then the possibility of excessive litigation itself does not arise.”
The Budget proposal to reduce the corporate tax rate from 30 per cent to 25 per cent over four years along with the phasing out of exemptions will make the tax system cleaner and simpler, he said.
Tax assesseesJaitley also pointed out that the number of tax assessees in India is very low but their numbers could increase as the economy expands.
“Compared to a society of 1.2 billion, are we a society with too few assesses,” he asked, noting that a large number of families have only one tax assessee. While a significant portion of the population is below the poverty line, 65 per cent of the population is involved in agriculture, which is exempt from income-tax, he said.
Both the Finance Minister and Law Secretary PK Malhotra underlined the need for faster disposal of cases.
Jaitley said that tribunals such as the ITAT have the best chance outside courts to dispose of cases and reduce tax arrears as courts often do not follow prescribed time limits.
“The rest of the society is bound by time constraints but courts are not,” he said.