Let us hope for better

The Income Tax Simplification Committee chaired by the Retired. Justice R. V. Easwar released a Report (Part-1) (attached), containing draft recommendations for consideration of various stakeholders. Keeping in view the complexity of the law and mandate of the committee, first draft report focuses on simpler issues that need immediate attention. A summary of the same has been provided below:
1. Simplification Committee recommends deferment of “Income Computation and Disclosure Standards” (ICDS) in order to provide more time to taxpayers grappling with regulatory changes such as Companies Act, 2013, Ind-AS and the proposed GST;
2. Simplification Committee addresses vexed issue of Section 14A disallowance, proposes that dividend received after suffering dividend-distribution tax and share income from firm suffering tax in the firm’s hands will not be treated as exempt income and no expenditure will be disallowed as relatable to them; Also suggests that expenditure disallowed u/s 14A shall not exceed the amount claimed as exempt;
3. Committee also moots reduction in TDS rate for individuals and HUFs from 10% to 5%;
4. Measures suggested to address issues relating to Sec 206AA, non-residents not having PAN be allowed to furnish their Tax Identification Number (TIN) from the country of residence;
5. Recommendation that amendments be made to provide that in cases where shares are shown as capital assets and held for one year or less, the Assessing Officer will not re-characterise the surplus on sale as business income, if the value of surplus is below Rs 5 lakhs;
6. Recommends increase in turnover limit for tax audit applicability from Rs. 1 cr to Rs. 2 cr for business and Rs. 1 cr for professionals ;
7. Proposes presumptive income scheme for professionals (similar to Sec 44AD), 33.33% of total receipts to be taken as estimate;
8. Recommendation that making fresh claims by taxpayer be allowed during assessments and also states that re-opening or revision of assessments under sections 147 and 263 respectively should not be made merely on the basis of audit objections;
9. Amendment to section 254(2) to reduce the time –limit for rectification of orders of the Appellate Tribunal from the present 4 years to 120 days;
10. Recommendation for amendment to section 273B to include no penalty for concealment if :
(i) assessee has taken a bona fide view of a provision enabling a claim etc. or on the basis of any judicial ruling of any Tribunal, High Courts or Supreme Court; and
(ii) if any addition or disallowance is made ad hoc on assumptions or without evidence;

11. Simplification and rationalisation of the provisions of Section 197 and Rules for lower or non-deduction of TDS, aimed to improve ease of doing business;

12. Proposal for certain amendments in Rule 37BA to obviate hardships arising in relation to claiming of credit for tax deducted under section 199;

13. Rationalisation of the provisions relating to set off of refunds due to an assesse;

14.It is proposed to amend Section 50C in case where the date of agreement fixing the sale value for transfer of capital assets being land and building is different than the date of registration of such transfer of assets, the value to be adopted for computing capital gain should be the value on the date of registration of such transfer of capital asset if the consideration received is less than the value adopted. This will be in line with the provision of section 43CA;

15.Amendment to Section 56(2)(vii)(b)(ii) to eliminate taxation of the purchaser of the property on the amount of difference between the sale price and the stamp-duty value; and

16.Section 255(3) provides that a Single Member Bench of the Appellate Tribunal can dispose of Appeals in cases where the assessed income of the assessee does not exceed Rs.15 lakhs. It is proposed to enhance the monetary limit to Rs 1 crore. more