AO's power u/s 143(1)(a) removed: At present sec. 143(1)(a) of the I-T Act empowers the AO to make prima-facie adjustments with a view to rectify arithmatical mistakes etc. But this has become some sort of assessment in itself, where every return is examined minutely and sometimes the additions made are a matter of controversy as these are made beyond the statutory powers and in violation of even CBDT instructions.

The FM has realised that this exercise is futile and time consuming. Therefore it has been proposed to remove this power of making adjustments in returned income. As a result, additional tax of 20 per cent on the tax relatable to the amount of prima facie adjustment, which was levied u/s 143(IA), has also been scrapped. These changes are proposed to take effect from June 1, 1999 - and will fulfil the demand of industry.

Interest chargeable from assessees: It has beenproposed to reduce/ rationalise the interest chargeable from assessees to bring it to a uniform rate of 18 per cent per annum. The interest payable for late filing of returns u/s 234A as well as for short payment of advance tax u/s 234B was 2 per cent per month, which has been now reduced to 1.5 per cent per month w.e.f. June 1, 1999, However, the interest charged @ 1.25 per cent per month u/s 201(IA) for failure to deduct and pay TDS will be increased to 1.5 per cent to bring it at par.

It may be noted here that the I.T Department allows interest at only one per cent on refunds, resulting due to excess tax paid or TDS. An attempt has been made by the FM to reduce the gap in the rate of interest charged and allowed by limiting the difference to 0.5 per cent, which is a step in the right direction.

Time limit prescribed for disposal of appeals: With effect from June 1, 1999, it is proposed that Commissioner (Appeal), wherever possible, will decide the appeal within a year from the end of the financialyear in which such appeal is filed. Similarly, the Income Tax Appellate Tribunal (ITAT), wherever possible, shall decide on the appeal within four years from the end of the financial year in which such appeal is filed. It is also proposed to empower ITAT to award cost in suitable cases to discourage filing of frivolous appeals.

Requirement of furnishing returns extended to more cities: The filing of IT return on the basis of one-by-six economic criteria is now applicable to assessees in 35 notified cities, which is proposed to be extended to 19 more cities, to be notified by the CBDT.

Particulars of bank account and credit card: By proposing an amendment of section 139(6), it will be now mandatory to furnish in I-T returns the details of bank account as well as credit cards. This seems to be an attempt to lay hands on financial transactions of the assessees.

Tax payment before filing returns of block period: Clause 63 of the Bill contains a proposal to amend sec. 140 A, making it necessary to makepayment of self-assessment tax, while filing returns of block period in search cases u/s 158 BC, with effect from June 1, 1999. This was a loophole, which is sought to be curbed to ensure payment of tax.

Income from UTI now tax exempt: The long-awaited step to revive investors' confidence in UTI and mutual funds proposes to exempt income from all schemes of UTI and mutual funds by amending section 10(33) of the I-T Act.

It is interesting to note that while in the hands of investors there will be no tax on such income, but in the hands of UTI and mutual funds tax at 10 per cent shall be charged on distributed income under newly proposed sec.

115R. However, to give a respite to UTI and mutual funds, it has been provided that this tax of 10 per cent shall not apply for three years (up to the year to March 31, 2002), provided the income is distributed to unitholders of open-ended equity-oriented funds of UTI or other MFs. It has been proposed to exempt from capital gains tax transactions of amalgamationsand de-mergers of companies. Likewise, in case of buyback of shares, tax will be charged on capital gains only in the hands of the investor and the amount will not be considered deemed dividend u/s 2(22).

Tax on long-term capital gains (LTCG) reduced: The tax on LTCG on transfer of shares and securities is proposed to be restricted to 10 per cent of capital gain. However, while computing tax at 10 per cent, the benefit of indexation of cost will not be considered. In fact tax at 20 per cent will also be computed allowing cost indexation as at present and the maximum tax payable will be limited to 10 per cent of capital gain (without indexing) as applicable in case of non-residents.

Surcharge: The FM has proposed to levy a surcharge of 10 per cent on all assessees. However, in case of individuals, and HUFs, surcharge will be applicable if total income exceeds Rs 60,000. It is suggested that this is a retrograde step and should be at most restricted only on corporate assessees.

From the angle of directtaxes, the amendments proposed in general are welcome and a sincere attempt has been made to remove many of the difficulties and anomalies. Of course, senior citizens have found special favour from Mr Sinha. Good luck to them.

(Narayan Jain is the former president of Direct Taxes Professionals Association)