Income Tax set for overhaul: Ease of compliance first on agenda; what government wants to hear from you

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Updated: March 23, 2018 12:52:37 AM

The Income Tax Act is set for an overhaul; for that purpose the Narendra Modi government last November has set up a task force of experts. The government wants to hear from you how the Income Tax Law in India can be made better.

Income Tax Notice, tax notice, income tax department, CBDT, taxmen, how to check income tax notice online, Notice u/s (148), Notice u/s 143(2)Income Tax set for overhaul: Ease of compliance first on agenda; what government wants to hear from you

The Income Tax Act is set for an overhaul; for that purpose, the Narendra Modi government last November has set up a task force of experts in the field. The task force was given six months time for a complete overhaul of the “50-year-old” Income Tax Law, 1961 to a modern law according to the present day needs. Now as the 6-month-deadline is approaching, the government has asked for suggestions, not only from experts but common citizens too — with an aim to ease compliance to broaden the tax base. FE Online had reported earlier that ease of compliance would on government’s priority.

The government-appointed task force wants to know from you — the taxpayers — what kind of issues you face so that they can “draft a new Direct Tax Law in consonance with the economic needs of the country”, the Income Tax Department said in a tweet. From understanding whether you need an expert’s help to file your Income Tax Return to prosecution for TDS is being launched in an appropriate manner, the Income Tax Department has six sections, each with 3 to 8 questions. The six sections are Income Tax Return, Tax Credit, Processing/Scrutiny of return, Litigation and recovery of disputed tax amount, Penalty and prosecution, and Other suggestions.

Income Tax Task Force member Mukesh Patel in an interview with FE Online last December said that the Modi government was looking at simplifying the entire process of tax-payment, minimised exemptions that were open to interpretation, and, most importantly, to reduce personal contact between the taxpayer and the tax officials to reduce harassment. (Read here)

The idea of revamping the Income Tax Act perhaps is also an attempt to reinstate the Direct Tax Code (DTC), brought by P Chidambaram when he the Finance Minister in 2009, in a new avatar. The DTC proposed simpler tax code, abolished unnecessary exemptions, and created space for lower tax but with the new government coming in power, the bill lapsed in 2014 with the dissolution of the Lok Sabha.

Here are the questions that the government is asking for changes in the Income Tax Law:

Filing of return of income

  • Whether you could fill return forms ITR-1 (Sahaj)/ ITR2 for non-business taxpayers without any help from a professional/ Tax Return preparer?
  • Do you face any difficulty in e-filing of the return of income (ITR 1 to 7)
  • Do you have any suggestion regarding adding a new category or any further information in the IT Return?
  • Should exempt income be reported separately in the IT Return?

Tax Credit

  • Whether any issues are being faced in e-filing of the TDS returns?
  • Whether certificates under section 197 for nil/ lower deduction of tax at source are being timely issued?
  • Whether your tax credit is reflected correctly in Form 26AS? What are your suggestions to tackle the mismatch, if any?

Processing/ Scrutiny of return

  • Are you satisfied with present system of centralised processing of return in terms of its time and online communication with the Centralised Processing Centre (CPC)?
  • Are your refunds being processed timely and correctly?
  • Do you feel that an appropriate show cause is being issued by the Assessing Officer (AO) before making any addition in the assessment?
  • Do you feel that reasonable opportunity in terms of time is being provided to respond to the show cause notices proposing the additions, if any?
  • Do you feel that the system of approval of order by the Dispute Resolution Panel (DRP) has worked well to avoid high pitched assessment? If not, please state the problems and provide suggestions to improve the same.
  • Do you feel that rectification applications are being disposed off within the prescribed time of six months?
  • Do you feel that the e-assessment process will be helpful in improving transparency, accountability and effectiveness of the tax administration?
  • Do you feel that refunds in scrutiny assessments are being computed and received timely?

Litigation and recovery of disputed tax demand

  • Do you think that there should be a strong Alternate Dispute Resolution mechanism for reaching effective resolutions?
  • Do you feel the Mutual Agreement Procedure (MAP) is effective, quick and transparent?
  • Do you feel that appeals are being disposed off by the Commissioner of Income tax (Appeals) [CIT(A)] in time?
  • Do you think that specifying percentage of demand to be paid (20%) before disposal of appeal by CIT(A) has curtailed the arbitrariness and streamlined the process for collection of demand?
  • Do you feel that the Authority for Advance Ruling (AAR) forum should be available to all the assessees (residents and non-residents) for determining the tax liability upfront on complex transactions?
  • What are your views on the working of Income Tax Settlement Commission (ITSC)?
  • What are your views on the working of Income Tax Appellate Tribunal (ITAT)?

Penalty and Prosecution

  • What are your views on levy of penalties for various defaults under the Income-tax Act, 1961?
  • At what stage [Assessment/ 1st Appeal/ 2nd Appeal] should the penalty for tax evasion be levied?
  • Do you feel that prosecution for TDS is being launched in an appropriate manner?
  • Whether present system of compounding of alleged offence has worked well?

You can download the questionnaire from the official website of Income Tax Department and send the answers through e-mail: latest by 2nd April, 2018.

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