Rrestriction prescribed under Section 79 of Income Tax Act (IT Act) should not apply to start up ecosystem where change in shareholding pattern is due to infusion of funding by Investors without change in the management of the company run by original founders, the chamber said in its presentation submitted to the Revenue Secretary here today.
Rigours of section 79 of the IT Act should be restricted only in cases where the change in shareholding is effected with a view to avoid or reduce tax liability by way of a restructuring exercise.
A timely clarification to resolve this anomaly for the benefit of entire new areas, creating business and start-up culture which will lead in employment generation for millennial generation and making Digital India dream come true,, the chamber memorandum for consideration in the Budget, highlighted ASSOCHAM.
It said the tax authorities should treat each taxpayer as a customer of the Tax Department and make adversarial approach between taxpayer and department a thing of the past.
Customer focus should be strengthened and taxpayers should be provided with facilitating services to encourage him to comply with the taxation rules which should be easy, said Mr D S Rawat Secretary General ASSOCHAM.
The chamber also suggested merger of Central Board of Direct Taxes (CBDT) with the Central Board of Customs and Excise into a single Central Board of Revenue. Administration functions should be separated from the law-making jobs. Other suggestions included carrying out impact assessment studies of various tax policy measures and trade flows trends.
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