11 Suggestions for Union Budget 2021-22
CCI Professionals Forum has given a Pre Budget Memorandum to Shri Anurag Singh Thakur, Hon’ble Minister of State for Finance. In Memorandum Suggestions for Budget 2021-22 are made. Budget 2020 is likely to be presented in Parliament on 1st February, 2021.
Respected Shri Thakur ji,
Sub: Pre Budget Memorandum
We are a Forum of Professionals i.e. Advocates, Chartered Accountants, Company Secretaries, Cost Accountants and other professionals of the State of West Bengal and working as a Unit of the Calcutta Citizens’ Initiative. We admire the progressive steps and actions being taken by the Government of India under the pragmatic leadership of our Hon’ble Prime Minister with your active admirable role.
Sir, at the outset let me tell your honour that our Organisation lays focus on proper disclosure of income, payment of right amount of taxes and compliance of law. We all are together to join hands with the Government to boost the economy of the nation.
A. Tax Culture:
The foremost need is to develop tax culture. All citizens should be inspired to declare correct income and pay right amount of tax. We as professionals and NGO can actively help in this mission. Likewise there is need that the department should also act judiciously. The work culture need to be developed so that the officials respond to the taxpayers and professionals. Their mindset and attitude need to transform to achieve the objects as specified in Taxpayers Charter released by Hon’ble Prime Minister on 13th August, 2020.
B. Suggestions for Budget 2021-22: The Union Budget 2021-22 is likely to be presented in Parliament on 1st February, 2021. We take this opportunity to make some suggestions.
1. Income Tax Limit and Rates :
The alternate tax regime and optional tax regime offered for personal taxation and Corporates is welcome. However Personal Income tax Exemption Limit and Slab Rates needs to be reviewed. It will be appropriate if exemption limit is increased to Rs. 4Lakhs for all taxpayers. Tax Rate for the Slab Rs. 5 Lakhs to 10 Lakhs should be fixed at 10 per cent; next slab may be Rs. 10 Lakhs to 20 Lakhs with tax rate of 15 per cent and on income in excess of Rs.20 Lakhs tax may be charged at 25 per cent. Such a tax regime will help in developing tax culture and true disclosure of income by all.
It is welcome step that as an option, the tax payable by domestic Companies has been reduced to 22 per cent w.e.f. asst year 2020-21 under sec. 115BAB in case of no claim of specified exemptions and deductions and 15 per cent w.e.f. asst year 2020-21 under sec. 115BAA in case of manufacturing companies if registered on or after 1.10.2019.
Sir in the past the tax payable by Individual taxpayers was lesser than tax payable by Corporates. Therefore the maximum marginal rate in case of Individual taxpayers need to be reduced. It may be noted that in Alternate tax regime under sec. 115BAC w.e.f. asst. year 2021-22 for Individuals and HUFs the maximum tax rate remains at 30 per cent on Income above Rs.15 Lakhs. The number of slabs also need to be liberalised.
2. Need to simplify and shorten Income Tax Returns (ITRs):
The ITRs are very complicated and lengthy even running upto 80 pages. It is time to appreciate the agony of taxpayers an dtax professionals and make these shorter for ease of doing business.
3. Monetary Limit for section 44ADA for professionals:
The limit is now Rs.50 Lakhs. It should be increased to Rs. One Crore. The profit should be estimated at 30 per cent instead of 50 per cent. It may be noted that as per section 44AD presumptive income is considered if total turnover or gross receipt in the previous year does not exceed Rs. 2 Crore.
4. Monetary Limit for Tax Audit:
Considering the inflation, the Monetary Limit for Tax Audit of Accounts under section 44AB should be reviewed and increased to Rs. 2 Crore in place of present Rs. 1 Crore in case of business. It should be increased to Rs. One Crore in case of profession.
5. Amendment of section 56 : The amount received by a member of Hindu Undivided Family (HUF) from the HUF should be excluded from the purview of section 56 (2). The definition of relative in section 56(2) needs to be modified. As per present definition if an Uncle or Mama gives gift to his nephew or Bhagana it is exempt as they are treated relative. But in case of a gift given by Bhatija (Nephew) or Bhagna/ Bhanaja to his uncle is not exempt due to erratic definition of relative. There are unnecessary litigations on the point.
6. Need to lower tax rate under section 115BBE:
There is a need to restore back the old rate of 30 per cent tax in section 115BBE as it stood upto asst year 2016-17, before amendment post demonetization in December, 2016. The tax @60 per cent ++ (aggregating to 78 per cent) is too harsh and in case the A O makes addition and holds any transaction not explained to his satisfaction, it may be 84 per cent with penalty. It is very unjustified and should be brought back to 30 per cent with retrospective effect from asst year 2017-18.
7. Re-opening of assessments:
The period for re-opening of assessments should be reduced under section 147. The time limits were set when time limit for completion of assessment used to be 3 years and now it takes just one year. In fact, re opening should take place only if the amount bot disclosed as income is above a certain limit, may be at least Rs. 20 Lakhs.
Prosecution provisions under the Income Tax Act should be deleted as has been done under the Companies Act.
9. Block period in Search Cases:
In cases of Income tax search, the Block period should be reduced to maximum of 5 years.
10. Advance Tax:
The provision of section 207 should apply to HUFs in which Karta is a senior citizen. Section 207 provides that advance tax provisions do not apply if an individual senior citizen does not have any income chargeable under the head “Profits and gains of business or profession”. The Courts have also held that HUF is in fact represents its individual members.
11. Deeming provisions:
There are several deeming provisions under the Income Tax Act. These need to be reviewed and minimized. The addition in income should be made only when the department has evidence to substantiate. For example information in form 26AS is a good tool. However at present in case of investment in mutual funds in joint names, the information is sent in both the files. Generally, the investment is by the first holder so information should appear in Form 26AS of first holder only. It is necessary to avoid undue problems to taxpayers.
We request that the above suggestions may kindly be considered.
Once again we not only assure but make commitment of our actions for all round growth of our economy.
President, CCI Professionals Forum