Shishir Sinha

Pramod C Mody, Chairman of the Central Board of Direct Taxes (CBDT), says the new proposal for dividend taxation has brought clarity on the whole issue of implementation.

In an interview with BusinessLine , he cautioned the non-filers of income tax Returns, stating that they are being watched. Excerpts :

How much is the direct

tax collection till date?

As of now, collection is at ₹6.64-lakh crore. The revised targets are ₹9.5-lakh crore, and if the present trends continue and considering the fact that a good portion of overall collection comes in the last month, I am confident of meeting the target.

There is a concern that it will be difficult to implement deduction of tax on dividend income at lower treaty rate for foreign portfolio investors.

Do you agree with it?

On the contrary, there is more clarity now. I don’t think there is any cause for concern.

The rate is prescribed in the treaty, so there is no scope for any doubt. If the treaty prescribes lower rate, one will be taxed on that. This is going to benefit foreign portfolio investors.

We have seen action against e-commerce companies, jointly by the IT and GST departments. Will we see a continuation of this kind of joint effort?

The issue started with availing input tax credit.

The investigation arm of GST did some activity and found out that credit availed by the persons or entities was not correct and appropriate, and this turned out to be true. It definitely has an implication on their taxes.

The provision on services which you are trying to claim and providers are not found to be existent, then the question is whether those expenses or genuine or not. We tried to ascertain that.

We also came to the same conclusion that those entities from whom goods and services allegedly supplied are not existent, then booking of expenses on those accounts would not be correct. So, it has both GST and direct tax implication.

As the names that emerged so far are big they caught the attention, but overall, a kind of system has been put in place, whereby this exchange of information happens on a seamless manner and as contemporaneous as possible. So, people who are trying to game the system, they should not be allowed to do that.

How will the proposed

tax dispute resolution mechanism work

for smaller and

medium taxpayers?

A substantial chunk of disputes is within the threshold limit (taxable income of up to ₹50 lakh and disputed income of up of ₹10 lakh). Assesses within threshold do not have any alternative dispute resolution mechanism.

So, as a step towards reducing litigations and also to benefit taxpayers, this entire concept was conceived. Now, CBDT will come out with detailed scheme and notify it.

Work on the scheme has already started. At the given moment, I can envisage that considering the number of disputes, which will be eligible for proposed scheme, it would be substantial.

It would be pan India, but the only thing is that it would again be random and in faceless manner so that there is transparency, consistency and uniformity.

How has the progress of faceless assessment and faceless appeal been?

The progress has been very, very satisfactory. Among the cases allocated to faceless assessment centres, we have been able to complete 45,000.

What is the plan to

deal with stop

filers or non-filers?

The question of stop filers or non-filers will dodge the tax administration, but the the important thing is that the kind of information that is being supplied to taxpayers on his own transaction through the portal should motivate people to comply. Added to that is the ease with which you are able to file, the comfort you have with faceless assessment or faceless appeal.

All these create very good enabling environment for a taxpayer to be in the system.

The number of stop filers or non-filers is fluctuating, as some of these people keep filing the returns, but the strategy is very simple. For example, changes in TDS rules prescribe such deduction to be double in the case of non-filers.

We would very much want what so ever information we have for a taxpayer related with his high-value transactions, why he is not filing the return?

It could be because there is a notion that whether the information is available with the department or not, so we are making these available and he would be aware of consequences.

You need to create an ecosystem where the non-filer needs to feel that he is being watched.

The Budget has cut the maximum time limit for filing the original or revised tax return to December of the assessment year from March. What is the reason?

The way I am trying to curtail the time limit for reopening of assessment, I am also trying to squeeze the time limit for fling the return.

Once the entire thing is available to you, why should there be a gap? Effort is also there to squeeze the time limit for processing and scrutiny, if any.

We tend to finish the matter as early as possible. It adds certainty, and that motivates the people to be with the system.

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