Chennai: A simpler, reformed tax regime along with speedy and timely implementation of Goods and Services Tax (GST) and Direct Taxes Code (DTC) are the key expectations of industry body Assocham.
Timely tax reforms should form the central plank of the new government’s fiscal agenda by removing distortions and enhancing transparency while increasing the efficiency of tax administration and boosting Tax to GDP ratio, the assocham said in its Budget recommendation. “The taxpayer should be treated as a valued stakeholder in the economic development of our nation, with equitable tax laws for both the taxpayers and the tax administration.
It is imperative for India to widen its individual taxpayers’ base from 3.6 crores to 5 crores in the short term to increase tax revenues. At the same time, the taxation structure should be rationalized through a single and unified indirect tax regime and a progressive direct taxes structure,” said Mr Rana Kapoor, president of Assocham. Among the short-term recommendations for tax reforms are streamline indirect tax regime through a pan-India Goods and Services Tex (GST) roll out through concurrence of all states for the rollout, nationwide uniform rate to prevent tax arbitrage, mechanism to compensate states for tax revenue shortfall, revisit DTC bill by rationalizing taxes to create a more investor and business friendly environment as well as improve tax collections
Tax relief to corporates for mandatory CSR spend, efficient arbitration mechanism for speedy resolution of tax disputes, extension of tax holiday by 5 years under Sec 80-IA of the Income Tax Act to encourage investments in the Power sector, treat infrastructure projects, particularly water, roads, power at par with SEZ projects to extend all applicable exemptions and tax benefits, extend sunset clause under Sec 80-IC to facilitate industrial growth of specified areas and introducing investment allowance and increasing rate of depreciation on machineries were the other demands.
On its long-trm recommendations list, assocham called for Review of existing Double Taxation Avoidance Agreements (DTAAs) particularly with Mauritius, avoid retrospective application of tax laws & defer General Anti Avoidance Rules (GAAR) rollout, institute e-governance in tax system, widen the scope of advance ruling mechanism for cross border transactions to reduce tax disputes & litigation.
The body also sought overhauling of customs & excise duty structure and favorably review tax benefits of SEZ for Minimum Alternate Tax/Dividend Distribution Tax, encourage technology up-gradation through foreign collaborations and investments by abolishing the R&D Cess Act and increasing efficiency, transparency and incentivisation in tax administration.
