EXPECTATION FROM THE TAX BAR REFORM AND STABLE TAX REGIME STRUCTURAL CHANGES FOR BETTER ADMINISTRATION OF TAX LAWS
The Hon’ble Prime Minister of India, Shri Narendra Modi, in his address on the eve of Make in India week at Mumbai on 13th Feb., 2016, has promised more economic reforms and a stable tax regime. It is beyond doubt that the Government is making a very sincere attempt to bring about ease of doing business in India, so as attract more investments to India. We hope that the vision of the Hon’ble Prime Minister of India and the Hon’ble Finance Minister gets ingrained at the grass root level. Tax professionals highly appreciate the unequivocal steps taken by the Government to bring stability in tax laws and the firm assurance against any retrospective tax amendments. We are of the opinion that for achieving the dream of Hon’ble Prime Minister and Hon’ble Finance Minister following suggestions may be considered:
Mind set of tax officials in the field must be changed from tax collection to tax service;
Introduce Accountability provision under the tax laws as per the recommendation of Dr. Raja Chelliah Committee;
All instructions to the Assessing Officers may be made public;
All orders of Assessing Officers may be made appealable to Commissioner (Appeals) and all orders of Commissioners/Chief Commissioners may be made appealable to Tribunal;
For filing of appeals of revenue before Supreme Court the monetary limit may be increased from present limit of Rs. 25 lakh to Rs. 1 crore;
Transparency is needed in appointment of members of the Settlement Commission and also to be debated whether the power to settle the matter may be given to the ITAT;
In respect of domestic taxation issues, power to grant advance ruling may be given to ITAT by introducing provisions similar to those in the Maharashtra VAT Act;
Prosecution matters relating to Direct taxes may be decided by two Judicial Members of the ITAT;
Where substantial questions of law are involved and where different High Courts have taken different views, Tribunal should be able to refer the matter directly to the Supreme Court;
CBDT may publish the information where the Department has accepted the orders of High Courts or Tribunal;
CBDT may publish the list of matters admitted by various High Courts on various issues;
Guidelines issued regarding non-seizure of jewellery in cases of search were last revised in the year 1994. These limits may be increased;
Statement recorded in the course of search and survey may be directed to be furnished to the assessee within seven days of search or survey, as the case may be;
Compounding fee may be liberalised. Matters pending before Courts for more than 15 years may be compounded by prescribing minimum compounding fees;
Sections 54 & 54F may be amended to expressly provide that as long as the amount is invested the benefit of exemption may be given;
As suggested by Justice R. V. Easwar Committee, ICDS may be postponed at least for few years;
Huge litigation is on the issue of whether the profit on sale of investments in shares and securities or mutual fund is assessable as business income or capital gains. It may be clarified that if the investment is held at least for more than 30 days it may be treated as investment and those held for less than 30 days may be treated as stock-in-trade; this may bring clarity and help to reduce the litigation;
One of major sources of litigation is disallowance under section 14A. The said provision may be deleted, or alternatively the disallowance of expenditure may be restricted to 2% of dividend income or actual expenditure or as per rule 8D whichever is less;
Large number of the writ petitions before the High Courts are against initiation of reassessment proceedings, as some Assessing Officers do not follow the guidelines prescribed by the Apex Court and other High Courts. Field Officers may be educated on the law laid down by Apex Court and High Courts. Against the rejection order of the Assessing Officer, an optional appeal may be provided directly to the Tribunal which should be disposed of within three months of filing of appeal. This may help reduce substantial litigation before the High Courts.
Linking of all High Courts to the Supreme Court so that the option may be given to argue the matter before Supreme Court by sitting at the respective High Courts;
Strict implementation of time limit for passing orders by CIT(A) must be done;
Remand report must be furnished within one month of direction. In case the Assessing Officer is not able to send, he has to take extension from the CIT(A) stating reasons, however maximum time limit should not exceed six months;
Ease of doing business may be further facilitated by changes in the stamp laws which presently are different in different States. The same may be aligned together to introduce simplicity.
Professional organisations such as the AIFTP, the Chamber of Tax Consultants, Bombay Chartered Accountants’ Society etc. may be involved by the Government before amendments are brought in to the statute.
We hope concerned Officials in the Ministry of Finance will look into the suggestions positively. I appeal to all tax professionals to contribute further suggestions in this regard.
Dr. K. Shivaram