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April 26, 2020

Know 12 proposal of IRS – IT dep to boost Tax Revenue

Know 12 proposal of IRS – Income Tax Department to boost Tax Revenue  for the government to help deal with the Corona Virus pandemic

 A paper — titled ‘FORCE’, which stands for Fiscal Options & Response to the COVID-19 Epidemic — jointly prepared by the group of 50 Indian Revenue Service (IRS) of Income Tax Department suggest following measures to deal with the Corona Virus pandemic and increase revenue for government

The recommendations are part of a policy paper titled “Fiscal Options & Response to Covid-19 Epidemic (FORCE), which the IRS Association presented to the Prime Minister’s Office (PMO) and the Union Finance Ministry Saturday, sources in the organisation said. It has also been sent to the Central Board of Direct Taxes (CBDT), the sources added.

1) Tax Rate of 40% for ‘super rich’

Raising income tax rate to 40 per cent for those who earn over Rs 1 crore a year, re-introduction of wealth tax, effecting a one-time Covid-19 cess of 4 per cent on taxable income of over Rs 10 lakh.

2) Tax India income of foreign companies

Increase surcharge paid by foreign companies on income earned from their Indian branch offices or permanent establishments from 5% currently to 10% or 20%

3) Increase equalisation levy for e-commerce firms

Currently, the government levies a health and education cess of 2 percent each. The officials have proposed an additional one-time ‘COVID Relief Cess’ of 4 percent to help finance capital investment

The equalisation levy collection for FY 2017-18 was Rs 550 crore and FY 2018-19 was Rs 939 crore,” the paper states. “Going by the growth of business in the sector, the said increase in rate is likely to contribute a good amount of increased revenue. 

4) DBT for the poor

Direct cash transfer of Rs 3,000 to Rs 5,000 a month for the most economically disadvantaged 12 crore households over a period of at least six months.

5) CSR Fund for COVID-19

Companies undertaking coronavirus-related relief activities under the CSR ambit be allowed to claim the expenditure incurred as a business deduction under section 37 of the Income Tax for FY21 only. This incentive will help mobilise CSR funds for disaster management.

6) Tax holiday or tax break for healthcare sector

A complete tax holiday or tax break is proposed for the next three years for all corporates, firms and businesses operating in the healthcare sectors like manufacturing of pharmaceuticals, medical grade masks, gloves, gowns, ventilators, testing labs, etc

7) New tax saving scheme like coronavirus savings certificates

Individuals and Hindu Undivided Families (HUFs) can be offered an additional deduction for investments up to Rs 2.5 lakh made in this fund in line with that made u/s 80C. The amount invested will have a lock-in period of five years and will generate interest income for investors in line with what the government pays for various small scale saving instruments.

8) Amnesty scheme for collection of undisputed demands

Vivaad se Vishwaas Scheme 2020 only covers demands under dispute and not outstanding demand. In order to incentivise collections, they propose an amnesty scheme waiving off interest u/s 220(2) of the I-T Act

9) Short Term Loss in Shares to set off against salary Income

allowing short-term capital loss suffered by retail investors due to the recent stock market slump to be set off from their salary, that is, sparing them any tax liability on the money lost, this will help in to boost consumption and increase disposable income.

10) No Tax if you lost Job

Deferral of tax payment by individuals who have lost their jobs for six months or until they find a new job

11) Tax moratorium for MSMEs

MSME sector is bound to be the worst-hit by the crisis. These include a tax moratorium for MSMEs whose total tax liability is less than Rs 5 crore-10 for one year

12) Reintroduction of the Inheritance Tax

Inheritance tax is levied mostly in developed countries, with rates as high as 55 percent. In India, it was in force till 1985 and was payable on a slab basis and ranged from 10 percent to 85 percent. the paper proposed to Reintroduction of the Inheritance Tax