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The Direct Taxes Code Bill, 2011 (DTC) vide Schedule 14 seeks to persist with the scheme of presumptive taxation albeit with the same kid-gloves. In the twilight year of the extant Income-Tax Act, 1961, one expected the extant regimes to take a cue from, and be consistent with, the upcoming regimes. But there are inconsistencies not only between the presumptive taxation scheme as in vogue and the one contemplated by the DTC, but also between the one in vogue and its minutiae contained in the form for filing return for small businesses and professionals called Sugam.
The government has been trying to draw shopkeepers into the tax net with kid gloves, but it has not worked. The DTC seeks to offer a longer rope . Those with turnover/gross receipts up to Rs 1 crore during the relevant financial year can partake in the scheme as against the existing Rs 60 lakh. Only 8 per cent of the turnover/gross receipts would be deemed to be profit from business.
The DTC shuts its door on professionals as far as this scheme is concerned. But the extant law has not disallowed the scheme to professionals. Given the ambiguity, a chartered accountant for example with gross receipts of Rs 60 lakh can get away with an apology of a tax — Rs 32,000 plus education cess.
Contradictions galore
The form prescribed for those wanting to avail of the scheme for the AY 2011-12, Sugam is beset with a lot of contradictions and in a way renders ineffectual the letter of the extant law codified in Section 44AD. Sugam asks him to disclose the closing balances of sundry debtors, sundry creditors, stock and cash. A retailer is likely to recoil. Any extraction of information is resented instinctively as much out of laziness as out of suspicion born of fear. What is required is a carrot and stick approach to enlarge the taxpayer base.As far as possible a presumptive tax scheme should be dovetailed into another scheme so that the two are interlocked. For example, truckers for whom there is a separate scheme in vogue should not be given pollution clearance certificate unless they simultaneously purchase say a tax sticker.
(The author is a Delhi-based chartered accountant.)
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