 "Pranav Sayta")
The committee set up by the government in October 2015 has done a commendable job by issuing its first batch of recommendations in a short span of less than three months. The recommendations are on issues, which are simple but need immediate attention, in the areas of curbing litigation and ease of doing business. The recommendations are open for public comments, reflecting an appreciated consultative approach on the part of the government.
The committee has suggested various measures to avoid delays in issue of refunds, such as granting of refunds without awaiting completion of assessments, higher interest on delays and precluding set-off of refunds against demands without dealing with taxpayers' objections. Taxpayers struggling to receive timely refunds would surely applaud these recommendations.
The recommendations around enabling disclosures in the return form and providing protection from penalty in cases of bonafide claims, also aim to curb needless litigation. Permitting fresh claims during assessment proceedings will provide opportunities to correct inadvertent omissions, and lead to fair taxation.
The classification of securities as investments or stock-in-trade based on the period of holding should bring clarity on this heavily litigated issue. Allowing deduction to shareholders for expenses incurred for earning dividends that have suffered distribution tax in the hands of the company (and other similar cases) should bring relief to a large number of taxpayers. The bar on re-opening of assessments based solely on audit objections will also avoid multiplicity of proceedings, which are otherwise also generally struck down by courts.
Withholding tax at 20 per cent in the absence of providing PAN deters non-residents from doing business with India. Accepting, for this purpose, the identification number issued in the home country is a welcome step for boosting international trade. Simplification of withholding tax provisions by rationalising threshold limits, reducing rates and relaxing timelines are likely to ease compliance for deductors as well as improve liquidity of deductees. The suggestion to defer implementation of ICDS (Income Tax Computation & Disclosure Standards) too is a positive move. E-governance of taxation processes should increase efficiency in administration.
As a whole, the recommendations bring out a refreshing mindset that encourages simplicity, fairness and accountability. This would indeed foster trust and confidence in taxpayers and promote ease of doing business. The report is surely a forerunner to more elaborate guidance from the committee in the future.
(Views expressed are personal)
Pranav Sayta
Tax partner, EY India
Tax partner, EY India
