Recent Direct Tax Reforms in India
Information Technology has made the life of tax payers easy as they don’t need physically go to banks to deposit bank challans and present the case and documents to assessing officers. To make further simple, the CBDT recently came up with a proposal paperless income tax assessment over emails. This would save the taxpayer to pay a visit to IT office, particularly in case of small amounts. Pilot projects in this direction have been launched in Mumbai, Delhi, Chennai, Bengaluru and Ahmedabad.
Sevottam: Efficient grievance redressal
To bring new life to the sluggish grievance redressal system, the department is using ‘Sevottam’ platform that connects all income tax offices in the country. The idea is to address the queries and grievances in real time.
The IT department is working towards processing and sending tax refunds within 10 working days. The initiative to verify Income Tax Return (ITR) by Aadhaar or bank database has been taken.
Pre-filled ITR forms
Despite of online forms, many people still use offline downloaded forms for tax purpose. The Department is now taking an initiative to offer pre-filled forms which automatically populated with user / taxpayer data and are downloaded with most information filled already.
To increase coverage of the PAN, the government has been conducting PAN camps across India. There is also a proposals to launch Income Tax Business Application-Permanent Account Number (ITBA-PAN) portal, through which anyone can apply for PAN online and get it within 48 hours.
Income Tax Rates
The personal income tax rates have been rationalized, however, currently the minimum taxable income is Rs. 2.50 Lakh.
Corporate Tax Rates
Despite of the demand to bring down the corporation tax rate to 25%, the current effective tax rate is around 34% and 42% for Indian and foreign companies. Further, Indian companies still need to pay 12% Dividend Distribution Tax, which is regressive.
Wealth Tax in India was introduced in 1957 and was levied @1% on Individuals, HUF’s and Companies if the Net Wealth of such person / entity exceeds Rs. 30 Lakhs. This tax is now abolished from April 1, 2015. The loss of the revenue is to be compensated with additional surcharge on super rich tax payer earning more than Rs. 1 crore.
Direct Taxes Code
Direct Taxes Code (DTC), which was first released in 2009, sought to replace the existing Income Tax Act 1961 and Wealth Tax Act 1957 through a single legislation, with consolidation and improvements in the way taxes are collected in India. It sought to consolidate all direct taxes. The current NDA Government has put it in cold storage and will not pursue it. As per finance minister, most of its proposals have already been incorporated in the Income Tax Act, there is not merit in pursuing it.