Rationalisation of the capital gains tax regime will need more groundwork and data collection, says Nitin Gupta, chairperson, Central Board of Direct Taxes (CBDT). In an interview with Surabhi, Gupta says efforts will continue to improve compliance and widen the tax base. Edited excerpts:
A big expectation in the Budget was on the rationalisation of capital gains tax. But it did not happen…
The issue is rather complex and any review includes elements like the asset pieces, TDS, the periods of holding, etc. One is the flat regime, the other is the indexation regime; then there are different asset classes. It is very difficult to find common ground where everyone is benefitted. It’s very tough and may require more groundwork and data collection, which is a time-consuming process. We don’t have the bandwidth (to deal with these issues in a short time). We were working on the Budget and now we will follow it up till the Finance Bill is passed.
A big announcement was on 100 joint commissioners being deployed to cut down litigation. How much will this help?
The incidence of litigation and number of pending cases have grown because of pandemic, the move to the faceless regime, issues of video conferencing, etc. There is a genuine concern among us on this. We don’t have working hands to that extent. We will be deploying, carving out something and putting the joint commissioners, additional commissioners for appellate work for those cases which have not got the approval at that level — cases of processing, TDS and assessment where approval was not granted by joint CIT or additional CIT. A section of cases will be diverted for quicker disposal. We will work on the monetary threshold for this. It will take time. Once the (Finance) Bill is passed, it will take some time at the back-end, some diversion of posts. We will try to do it before the second half of the fiscal year.
There was a lot of expectation that the 15% corporate tax rate for new manufacturing units would be extended…
Firms still have time till March 31, 2024 to set up projects. They were aware of the deadline and must be working on the plans to start production.
How is the adoption of the 22% (corporate tax) rate going?
It’s going well. It is the choice of the taxpayer. A company may have losses, so it would like to remain in the 30% regime (for set-off). There could be Chapter 6A deduction of backward areas, or MAT credit. There are several features where the companies may like to stay in the 30% regime.
The Budget has also tightened norms for special economic zones…
No such move has been made. We’ve said they should bring the forex with-in six months. That provision remained in the statute but we have come out with it in an explicit manner.
On the direct tax collections, there is some moderation expected in the coming fiscal…
This financial year, we had a good buoyancy. Gross collections are growing at about 24% and net collections are rising at about 18-18.5%. With the increase in the target in the revised estimate, our growth rate vis a vis last year is around 17%. We believe we will meet it. In FY24, we have a target of 10.5% growth over the revised estimate, the same rate as the nominal GDP. We think this is achievable and not very high. There is some moderation in GDP but with better administrative measures and technology, we can make it.
Will you focus more on compliance efforts?
Yes. We have taken a few initiatives in the current fiscal. The first is the e-verification scheme, under which we have pushed about 70,000 cases of information and we are interacting with the taxpayers, then working on it. There are teething troubles, but it happens with a new scheme. The updated return is part and parcel of the e-verification. Together, the two are giving us good traction. A little under 1 million updated returns have been filed. Technology is at our command. All taxpayers are being shown their AIS so that they can find the return of income correctly. We will be able to widen the tax base and tax net.
When will the common ITR be released?
We had released the draft forms in November 2022 and had sought stakeholder comments. Now we will be working on it. We will see how quickly we can do it and in what forms, because all things may not be possible at one go. It is not as simple as it looks. A lot of changes will be needed in the software and back-end. I can’t commit to anything as of now. We have to talk to service providers on how much time they will need. The challenge is that it should not cause disruption rather than ease of filing for taxpayers. We will like to test it. For individuals, ITR 1, 2 and 4 are simplified forms. ITR 1and 4 are likely to remain.