Bare Minimum Expectations from Union Budget – 2022
To
Smt. Nirmala Sitharaman
Hon’ble Finance Minister
North Block
New Delhi-01
Subject: Bare Minimum Expectations from Union Budget – 2022
Respected Madam,
At the outset, The Team Tax Talk would like to congratulate you for the 4th consecutive Union Budget 2022 to be presented by you in the parliament on 1st February, 2022.
After the tough time of Covid-19, we are quite confident that the budget would pave the path for a 5 Trillion economy.
Here are few bare minimum suggestions on Direct Tax for the upcoming Union Budget -2022 and wish you to kindly consider it in the coming Union Budget – 2022
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Scrapping of TDS U/s 194Q and TCS U/s 206C(1H) :
Section 206C(1H) which provides for TCS on sale has already added an unnecessary compliance burden on the taxpayers. The addition of Section 194Q in the Income Tax Act – 1961 has further complicated the compliance process and has been the biggest deterrence to the concept of “Ease of business”. Though the seller is getting immunity from the TCS compliance u/s 206C(1H) if the buyer does TDS, it is case-specific and cannot be generalized.It may be appreciated that the data of buyers & sellers can very well be extracted from the GST returns by the Income Tax Department. TDS & TCS on purchase/Sale is neither widening the tax base nor increasing the revenue as the data of buyers & sellers are very well available & can be extracted from the GST returns.
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Practical suggestion to reduce the compliance burden of TDS /TCS Quarterly return:
a) There are an enormous compliance burden on the taxpayers which is killing the time from constructive activities to clerical activities. This needs to be controlled by due policy decisions.b) Quarterly filing of TDS/ TCS returns may be replaced by just two returns, one return for a 9 months period from April to December and the second for the period from January to March. It would relieve the deductor from the compliance burden and at the same time would give sufficient time to the deductee to verify the TDS credit and its follow-up with the deductor if the amount is not reflected.
c) Further, the small taxpayers may be relieved from the compliance burden of filing the TDS/TCS returns. This can be done by suitably designing Challan cum Return forms as is done in the case of TDS on the Sale of property.
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Disallowance towards PF/ESIC U/s 36(1)(va) in respect of Employee contribution paid after the due date under the Respective Act:
a) It may humbly be noted that businesses have numerous compliances to be done and are often engrossed with temporary liquidity issues. As a result, business houses find it difficult to make the payment of employee shares within the due date on certain occasions under the respective Act.b) The payment is often coupled with the fact that salary also in such cases is paid belatedly. Employees also co-operate with their employer in such situations.
c) Union Budget – 2021 has provided for outright disallowance of the amount of employee shares towards PF/ESIC if not paid within the date under the respective Act. This amendment has enhanced the financial burden of the taxpayers despite the fact that the industries and businesses are already struggling with liquidity crunch post-Covid-2nd Wave.
d) There are enough penal provisions under the relevant labor law to ensrue the payment within the due date.
e) In the interest of all, it is humbly requested that a suitable amendment may kindly be done so as to allow the deduction if the same is paid before the date of filing an income tax return as against due date under the respective Act.
f) Alternatively, the due date under the respective Act may be increased from the middle of the month to the end of the month.
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Enhanced amount of TDS & TCS for Non-Filer of Income Tax Returns U/s 206AA & 206CCA:
a) The Finance Act- 2021 has provided higher TDS & TCS rates if the recipient of payment or seller is not regularly filing the income tax returns. This is done by adding new sections 206AA, 206AB & 206CCA.b) Now, every person is required to verify the applicable TDS/TCS rate in each & every case.
c) The process of verifying whether the person is filing the income tax return or not is a time-consuming process as it has to be backed by the OTP at the portal.
d) It is humbly requested that the proposal may kindly be withdrawn as the Income Tax Department has enough infrastructure and system to ensure compliance from the non-filers. Adding compliance requirements on the recipient of payment/ seller will increase the workload & burden of the taxpayers.
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Faceless Assessment Scheme-2019:
a) We very strongly and honestly appreciate the efforts of the present Government in implementing the faceless assessment scheme which enhances the transparency in the administration and making income tax department corruption-free.b) Your Honour must know the fact that the biggest hurdle in its smooth delivery is the mindset of the assessing authorities who are making high-pitched assessments. Such high-pitched assessments are reflecting the irritation and annoyance of the officers.
c) In our humble submission, all such high-pitched assessments are carried out with the primary aim of making taxpayers feel that the faceless assessment scheme is bad for the country and the taxpayers may ask for restoration of the original assessment scheme.
d) It is humbly prayed that the concept of accountability may be established in the faceless assessment scheme whereby the penalty may be imposed on the assessing officer for error or intentional high pitched. Assesse may be given the right to demand for fixing the accountability of the assessing officer. An Independent “Accountability Examination committee” may be formed wherein not only the departmental team but also people from profession & ITAT may be taken so as to ensure the intended purpose.
e) Imposing unrecoverable tax demand on the assessee may be equivalent to killing the small taxpayers/citizens. To a great extent, human touch was there during the earlier physical assessment system. However, this human touch is totally missing in the faceless assessment scheme and abrupt high-pitched assessment orders are passed without realizing the fact that the taxpayers are human beings. It is humbly prayed that every order proposed with the addition of an amount more than the returned income may be passed through the test of “Human Touch” whereby the case may be examined from human angel as well.
