Income Tax Simplification Committee puts a smile on the face of Taxpayers!

The government had set up a committee chaired by Justice R.V. Easwar, a former Judge of Delhi High Court and former President of Income Tax Appellate Tribunal to simplify the provisions of Income Tax Act, 1961and suggest corrective steps so that the ambiguities in the tax laws can be removed which leads to unnecessary litigations.

On Monday, The Easwar Committee in its 78-page draft suggested several taxpayers friendly measures:

  • The committee recommended doubling the limit of Rs. 1 crore under the presumptive scheme to Rs. 2 cores and a similar scheme should be introduced for professionals whose total recipes dont exceed Rs. 1 crore during the financial year as this scheme is highly popular among small businessmen.

  • Annual earnings up to Rs 5 lacs from trading of shares shall not be treated as business income. This will remove the confusion as whether to treat the same as capital gain or business income and will also attract more retail investors into the arena of the capital market.

  • The committee gave utmost importance to TDS, According to the report, Nearly 65 percent of the personal income-tax collection was through TDS, provisions of which need to be made more tax friendly and not as ‘tedious’ as they have remained over the years.

  • The committee has proposed that TDS rates for individuals be reduced to 5% from 10% and raising TDS limit for:

 

  • Payments to contractors from current limits of 30,000 for a single transaction and 75,000 annually to Rs 1 lakh annual limit.

  • The Threshold for TDS limit on rent income from Rs 1.8 lakh annually to Rs 2.4 lakh.

  • The Threshold for TDS limit on fees for professional or technical services from Rs. 30,000 to Rs. 50,000, keeping the TDS rate constant at 10%.

  • The committee also suggested an exemption to non-residents not having a Permanent Account Number (PAN), but who furnish their Tax Identification Number (TIN), from the applicability of TDS at a higher rate.

The committee proposes that the maximum processes of the IT Department like filing income tax return, refunds, notices, scrutiny, appeals etc. should be done electronically so as to remove the hassles involved in going to the IT Department. It also suggests faster refunds with interest and in the case of delayed refund, a higher rate of interest.

These suggestive steps if approved by the government can make Indian Tax world a better place for taxpayers.

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