1. Taxes this year & what to expect next year

Taxes this year & what to expect next year

The year 2015 witnessed the NDA government’s first full-year Budget. There were several positive developments which made the taxpayer feel happy, if not fully satisfied.

By: | Updated: December 22, 2015 3:55 PM
As the personal tax slabs were left untouched in the Budget 2015, taxpayers are now waiting anxiously to have an increased maximum exemption limit in the upcoming Budget.

As the personal tax slabs were left untouched in the Budget 2015, taxpayers are now waiting anxiously to have an increased maximum exemption limit in the upcoming Budget.

For a stable tax policy and smooth tax administration, the government has taken several steps. One of the key step towards the same was setting up a committee headed by former Delhi High Court Justice RV Easwar, for simplifying the income-tax provisions, reduce litigation and bring in certainty in the tax policy for ease of doing business in India. This committee is expected to provide its first set of recommendations by January 2016, and hence, taxpayers can expect certain measures in the upcoming Budget rationalising the tax laws.

The government has also introduced an e-platform wherein the tax department will correspond with the taxpayers electronically. It would mostly obviate the need of a physical interface with the tax officer which often leads to complaints about harassment. In this regard, a pilot project of sending email queries, notices to taxpayers has already started. The Central Board of Direct Taxes is working on a strategy to create the required processes and capacity in this regard. Hence, it is expected that this e-initiative would become operational in 2016 which could lead to a significant change in the tax administration. This initiative would also supplement the “Digital India” vision of the government.

Further, with the commitment to fight against the black money stashed abroad, the government enacted a new legislation called the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, effective July 1, 2015. The black money Act had also provided a one-time compliance opportunity to the taxpayers (ended on 30 September 2015), to come clean by declaring their undisclosed assets overseas and paying tax and penalty thereon.

The year 2015 witnessed the NDA government’s first full-year Budget. There were several positive developments which made the taxpayer feel happy, if not fully satisfied.

One of the key highlights of the Budget 2015 was abolition of the wealth tax, which was replaced with an additional surcharge of 2% on individuals with income in excess of Rs 1 crore. This clearly showed the intention of the government of having a rationalised and simplified tax regime.

As the personal tax slabs were left untouched in the Budget 2015, taxpayers are now waiting anxiously to have an increased maximum exemption limit in the upcoming Budget. Widening of the tax slab will leave more income at the disposal of the taxpayers. This will ultimately increase the rate of consumption and investment at a macro level.

Over the years, there has been a sharp increase in the cost of medical facilities. Investments made in various avenues under Section 80C of the Act can always help the government to boost investments in different sectors as well as the taxpayers to save tax. However, with too many expenditures clubbed into the overall limit of Rs 1.5 lakh, taxpayers sometimes are discouraged from making further investments. Hence, in order to encourage investments among the taxpayers, the specified limit may be increased.

The writer is a senior director, Deloitte Haskins & Sells. With inputs from Pallavi Dhamecha, manager and Deepti Veera, deputy manager, Deloitte Haskins & Sells

  1. H
    Hemen Parekh
    Dec 23, 2015 at 6:51 am
    How to conquer Corruption ? There is only one sure - and superfast - way to get rid of corruption By introducing : * NEGATIVE MOTIVATION Putting behind bars ( - and right away ; not after 6 years ) , every corrupt fellow and immediately confiscating his ill-gotten wealth * POSITIVE MOTIVATION By abolishing Personal Income Tax and introducing Amnesty Scheme , incentivize # converting of black money into white # acceptance of all payments thru official channels As far as providing " Negative Motivation " is concerned , I had sent following suggestion to our Hon Prime Minister / Finance Minister / other Ministers / Secretaries etc , on 4th Nov 2015 : # INTERNET OF THINGS ( IoT ) As each currency note of Rs 500 / 1000 , is getting printed , embed it with microscopic RFID chips ( with this , current cost of a RFID chip will fall from 50 paise to 5 paise ) Besides communicating with each other , these chips will also transmit their existence location , through internet , to cloud-based servers of Income Tax Department This will form a " NETWORK OF CURRENCY NOTES ( NoC ) " You may like to call this Internet of Currency ( IoC ) , a sub-set of IoT ! # IP ADDRESS SYSTEM ( IP V 6.0 ) Each Rs 500 / 1000 currency note must be igned ( at the time of printing ) , its own unique Internet Address , using IP V 6.0 This IP address should be linked with the unique Serial Number printed on each note. Since IP V 6.0 , will be capable of igning " 2 * 10 to the power of 128 ", no of IP addresses , there is no danger of running out of addresses , even if we decide to extend this idea to Rs 100 currency notes ! Here are the most important BYE - PRODUCTs : * No more possibility of fake / forged / counterfeit , currency notes * No thief would ever want to steal such currency notes which continuously announce their location * No one would want to make any " Cash Deal " . All payments will become official only ! * Plastic currency notes will last 10 times longer ! This reform will enable the Central Government / Income Tax Department , to : * Continuously trace the movement of each of these higher denomination currency notes * Instantly locate any place ( using Google Map based GPS ) , where there is an aculation of more than Rs 1 Crore worth of currency notes Such aculation will be made to appear as a TAG CLOUD on the web site of IT Dept, like thousands of balloons floating on a map of India , capable of being drilled down to within 1 Sq Meter ! Of course , visible only to IT officers ; not to general public ! On each balloon , will appear a number announcing , " Amount of Cash here - Rs " ! This will vastly simplify the task of Anti Corruption Dept / Enforcement Dept etc Of course , RBI will need to allow 6 month's time to the owners of current paper currency notes of Rs 500 / 1000 , to get these exchanged with new plastic notes before withdrawal of the old notes from circulation Implementation of this suggestion , does NOT require ping of any BILL in Lok Sabha or being held to ransom in Rajya Sabha ! And it can be implemented in India , within ONE YEAR But if Chinese President Xi Jinping comes to know about the practicality of this suggestion , he might implement it in 6 months ! How come ? Simple ! Xi Jinping has the political will ! And no historical baggage ! ------------------------------------------------------------------------------------------------------- hemen parekh 22 Dec 2015 ( Also read blog " Network of Currency Notes " at : >Blogs )
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