No fresh income taxes, customs duties upon host of items

Sarkaritel
By Sarkaritel February 1, 2021 14:28

No fresh income taxes, customs duties upon host of items


Massive revenue-raising effort of Rs 2.8 billion to meet post-COVID pandemic challenges

FDI in Insurance sector up to 74% from 49%, Big-ticket LIC IPO coming, and disinvestment in Air India and BPCL to be completed in FY 2021-22 to raise Rs 1.75 lakh crore

Fiscal Deficit at 9.5% of GDP to be reduced to 6.8% by FY 2021-22 and 4.5% by 2025-26

Banks to be recapitalized by Rs 20,000 crore and Bad Bank to resolve NPA problems

By TN Ashok

New Delhi, Feb 01, 2021: Presenting a post-pandemic COVID 10 budget to counter a shrunken GDP growth and employment and crippled manufacturing sector, the Finance Minister Ms. Nirmala Sitharaman has virtually walked a tight rope with a balancing magic wand to prioritize first the health sector by raising the outlay on health sector to 3% of GDP, and proposing an outlay of Rs 2.80 billion to raise revenues for infrastructure spend, retaining expenditure levels, kick start manufacturing sector, and opening up insurance sector and recapitalization banks by Rs 20,000 crore. Markets have reacted positively to the measures with Sensex jumping immediately by 2,000 points.

Presenting the Union Budget for FY 2021-22, Ms Nirmala Sitharaman said, a new world order seems to be emerging, one in which Asia is poised to occupy a prominent position and India will have a leading role therein. In this scenario, our tax system has to be transparent, efficient, and should promote investments and employment in our country.

At the same time, it should put the minimum burden on our taxpayers. Quoting the Tamil bard Thiruvallavar from his immortal work Thirukkukural,  she said,  A King/Ruler is the one who creates and acquires wealth, protects and distributes it for common good. – Government introduced a series of reforms in the Direct tax system for the benefit of our taxpayers and economy. Few months prior to the pandemic, in order to attract investments we slashed our Corporate tax rate to make it among the lowest in the world. The Dividend Distribution Tax too was abolished. The burden of taxation on small taxpayers was eased by increasing rebates. In 2020, the return filers saw a dramatic increase to 6.48 crore from 3.31 crore in 2014. 150.

In the Direct Tax administration, we had recently introduced the Faceless Assessment and Faceless Appeal. I now seek to take further steps to simplify the tax administration, ease compliance, and reduce litigation. Relief to Senior Citizens, Now in the 75th year of Independence of our country,  we shall reduce compliance burden on our senior citizens who are 75 years of age and above. For senior citizens who only have pension and interest income, I propose exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income, she said.

Reduction in Time for Income Tax:  An assessment can be re-opened up to 6 years and in serious tax fraud cases for up to 10 years. As a result, taxpayers have to remain under uncertainty for a long time. The FM said she proposed to reduce this time-limit for re-opening of assessment to 3 years from the present 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of `50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.

Setting up the Dispute Resolution Committee: Government wants to reduce litigation, which mars the present taxation system. The Government came out with the Direct Tax Vivad Se Vishwas Scheme to give taxpayers an opportunity to settle long-pending disputes and be relieved of further strain on their time and resources. The response from the taxpayers has been the best ever as over 1 lakh ten thousand taxpayers have already opted to settle tax disputes of over `85,000 crores under this Scheme.  A Dispute Resolution Committee is being set up to ensure efficiency, transparency, and accountability. Anyone with a taxable income up to `50 lakh and disputed income up to `10 lakh shall be eligible to approach the Committee.

When Non-Resident Indians return to India, they have issues with respect to their accrued incomes in their foreign retirement accounts. This is usually due to a mismatch in taxation periods. They also face difficulties in getting credit for Indian taxes in foreign jurisdictions. Hardship of double taxation. Is now sought to be removed.

On tax audit, if your turnover exceeds `1 crore, you have to get your accounts audited. In the February 2020 Budget, govt had raised the limit for tax audits to `5 crore for those who carry out 95% of their transactions digitally. To further incentivize digital transactions and reduce the compliance burden, the FM has proposed to increase this limit for tax audit for such persons from `5 crore to `10 crore. While the Dividend Tax Distribution tax was abolished in last year’s budget, the new proposal is to provide ease of compliance, dividend payment to REIT/ InvIT is to be exempted from TDS.

Attracting foreign investment into infrastructure sector government had granted 100% tax exemption, subject to certain conditions, to foreign Sovereign Wealth Funds and Pension Funds, on their income from investment in Indian infrastructure. The government has now proposed to relax some of these conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment in infrastructure include, among others, tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating foreign funds in the IFSC; and to allow tax exemption to the investment division of foreign banks located in IFSC.

Indirect Tax Proposals: The GST is now four years old, and the government claimed it made record collections in the last few months. The GST Council has painstakingly thrashed out thorny issues. As Chairperson of the Council, I want to assure the House that we shall take every possible measure to smoothen the GST further, and remove anomalies such as the inverted duty structure, the FM said.

Custom Duty Rationalization: The Custom Duty Policy should have the twin objective of promoting domestic manufacturing and helping India get onto the global value chain and export better. The thrust now has to be on easy access to raw materials and exports of value-added products.

Towards this, last year, we started overhauling the Customs Duty structure, eliminating 80 outdated exemptions. Government now proposes to review more than 400 old exemptions this year. We will conduct this through extensive consultations, and from 1st October 2021, we will put in place a revised customs duty structure, free of distortions. I also propose that any new customs duty exemption henceforth will have validity up to the 31st March following two years from the date of its issue. Ms Sitharaman said.

Domestic electronic manufacturing has grown rapidly. We are now exporting items like mobiles and chargers. For greater domestic value addition, we are withdrawing a few exemptions on parts of chargers and sub-parts of mobiles.

Further, some parts of mobiles will move from a ‘nil’ rate to a moderate 2.5%. Iron and Steel : MSMEs and other user industries have been severely hit by a recent sharp rise in iron and steel prices. Customs duty is now being reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels. To provide relief to metal recyclers, mostly MSMEs, I am exempting duty on steel scrap for a period up to 31st March 2022, the FM said.

Sarkaritel
By Sarkaritel February 1, 2021 14:28