Ahead of the Union Budget 2023-24, the GCCI Taxation Committee headed by CA Rohan Bhandare has submitted a detailed pre-budget memorandum on direct tax to Nirmala Sitharaman, Union Finance Minister, requesting for various concessions and reliefs
Around 50 suggestions/recommendations have been made to the Memorandum signed by Ralph de Souza, President of GCCI under XII major heads.
GCCI have recommended the following suggestions in the pre-budget memorandum:-
I. Macro Level Reforms
1. Inclusion of natural gas under the Goods and Services Tax (GST) to avail input tax credit to industry and also to raise the share of the environment-friendly fuel in India’s energy basket.
2. Capital Gains provisions be simplified with 2 to 3 asset classes only, with the period of holding being 1 to 2 years for the respective asset classes. The rates of the long term capital gains could be in the range of 10% to 20% for such asset classes.
3. The Income Tax Department should draft a scheme wherein taxpayers should be given an option to pay advance tax on a monthly basis and exempted from the TDS provisions in the capacity of deductees.
4. TDS Wallet similar to banking payments wallet or similar to GST may be suitably implemented, wherein the electronic cash ledger takes into account any payment of challan for any accounting period or month.
5. GST Amnesty scheme be introduced to give relief to genuine and small taxpayers for smaller offenses and inadvertent errors. The scheme could provide an equitable solution to settle tax disputes and at the same time ensure that the Government recovers its revenues. It will also enable the trade to concentrate on business instead of litigation.
II. Rationalisation of Tax Rates and Threshold Limits
6. Simplifying, rationalising, and reducing personal tax rates for individuals. Further, the standard deduction should be restored for employees opting the tax rates prescribed u/s 115BAC of the IT Act.
7. To bring parity as well as encourage individuals to collaborate, the tax rates for partnership firms and LLPs be reduced to 25%.
8. Increase in exemption limits of Standard deduction, Deduction under section 80C, Children Education Allowance, Children Hostel Expenditure Allowance, exemption limit for clubbing of minor’s income, Leave Encashment benefit, Interest on housing loan, Limit for Gifts, Contribution to PPF etc.
9. Limit for allowable remuneration for each of the working partner be changed at the rate of Rs.2,50,000 per annum per partner or 90 percent of book profits whichever is higher for first Rs.10,00,000 of book profits and 75 percent of the remaining book profits.
10. Interest on all types of deposits (including fixed deposit interest) be included within the scope of section 80TTA.
III. Suggestions Relating to Tourism Sector
11. Hotels be allowed to charge Integrated Goods and Services Tax (IGST) that will enable seamless availability of credit to all travel agents and tour operators, and will thereby build a sustainable domestic meetings and conventions business within the country.
12. Restaurants should be given an option to choose between charging of 5% GST without ITC or charging GST at 12% with ITC benefit.
13. To give a boost to the tourism sector and make travel more affordable, GST on all accommodation services should be at a single rate of 12%.
IV. Suggestions Relating to Real Estate Sector
14. To avoid undue hardship to the real estate players who are not able to sell the units despite their best efforts, the period of 2 years should be extended to 5 years from receipt of occupation certificate for holding unsold inventory before attracting notional interest.
15. Input Tax Credit (ITC) be allowed to reduce tax burden on the developers. This will enable developers the room to lower end-user prices.
V. Suggestions relating to Startups
16. To provide benefits to new startups, it is suggested to extend the period of incorporation for another 3 years, i.e., startups incorporated till April 1, 2026, and also to extend the date of transfer of residential property by eligible start up under Section 54GB.
VI. Addressing litigative issues
17. The Government expedites the setting up of Tribunals so that the litigation at various courts gets consolidated at one forum.
18. All expenses related to CSR be fully allowed as deduction u/s 37 of the Income Tax Act, since the Income Tax already allows certain CSR expenditure as a deduction as eligible under Section 35/35AC etc. of the Income Tax Act. It is further suggested that this deduction be available to the assessees under the old as well as new taxation scheme.
19. The income tax law should be suitably amended to allow deduction for employees’ contribution to ESIC and PF if paid before the due date of filing of income tax returns.
20. TDS rate on professional services should be reduced to 2% to avoid characterisation disputes between fees for technical services and fees for professional services.
21. As a broader measure to simplify TDS compliance, the disparity in TDS rates for payments to residents under different provisions be eliminated and a uniform TDS rate be provided for all payments to residents to avoid characterisation disputes.
22. Any amendments impacting computation of total income and creating additional tax burden on taxpayers by Finance Bill 2023 should be made with prospective effect from A.Y.2024-25 and not from A.Y. 2023-24.
VII. Suggestions for Ease of Doing Business
23. The Government should decriminalise certain provisions of the GST law, The Government should raise the threshold limit for launching criminal proceedings and also revisit the current compounding provisions as well, so that the minor offenses are not penalised in a harsh manner.
24. It is suggested that all, or if not, at least the companies having turnover of less than one hundred crore be given the option to prepare their financial statements with the absolute figures, rather than rounding off the figures. This change would ease the process of preparation of accounts as well as preparation of returns under various laws.
25. In order to provide an ease of doing business as well as an ease of converting into an LLP, the threshold limits of turnover and total assets should ideally be removed or increased at least to Rs.10 crores and Rs.20 crores respectively by amending section 47(xiiib)
26. Withdrawal of provisions under Section 194Q pertaining to TDS in respect of purchase of Goods.
27. Tax be deducted at specified rates say 10 or 15% on payments made by an approved superannuation trust to employees (in circumstances other than referred in 10(13).
28. The limit of Rs.30,000/- under section 194c may be increased to Rs.75,000/- for single contract transaction and Rs.1,00,000/- to Rs.3,00,000/- for aggregate of contract payments.
29. Request to do away with filing of additional forms along with ITR for special rates (Section 115BA /115BAA/115BAC/115BAD)
29. The clause (ba) of section 12A (1) be suitably amended to provide for condonation of delay in case a reasonable cause is provided by the concerned trust.
30. Similar to the NIL Returns under GST law, a single click option to be made available to those with income below taxable limit to visit the website and file a declaration that their taxable income is below the basic threshold limit and that they do not need to file the tax returns. That will go a long way in ease of compliance for such taxpayers.
31. Extension of due dates every year is not a sustainable solution for the stakeholders and industry at large. Thus, a suitable amendment be made in the Income Tax Act allowing return of Non-Audit Cases up to 31st August every year. Further, in case of refund cases, no penal interest under Section 234A should be charged since there is no loss to the Tax Department.
32. It is suggested to amend section 54EC so that time limit for investment in specified bonds may be allowed up to the due date of filing of ITR instead of 06 months. Further, it is suggested that the said limit of Rs.50 Lakhs may be raised to Rs.1.50 crore.
VIII. Business and Profession: Expenditure & Deductions
33. The Fees paid to Registrar of Companies for increase in authorised capital may be allowed as revenue expenditure in 5 equal instalments.
34. In line with section 40(a)(ia) of the Act, it is recommended that Section 40(a)(i) should also be amended restricting the disallowance to 30 percent of the amount of expenditure to non-resident.
35. The benefit of section 44AD be made available to LLP.
36. Suitable amendment may be made to sub section 4 of Section 44AD to bring about an ease of doing business for small taxpayers.
37. The estimated rate of income @50% of the total gross receipts may be reduced to 30% considering the high cost of providing the services by specified professionals.
IX. Dividends
38. To reduce the impact of double taxation as well as encourage corporate structure of businesses, the rate of dividend taxation in the hands of resident investors/shareholders may be kept at a flat rate of 10 %.
X. Suggestions Relating to Interest & Penalties
39. Sec 201(1A) be amended to provide for interest only for the period of delay in deposit of TDS. Suitable changes may also be made in the TDS utility adopted by the Central Processing Centre (CPC).
40. The threshold for payment of advance tax be increased from the present `10,000 to `1,00,000. The requirement to pay 15% advance tax by 15th June for non-corporate assesses be removed.
41. The calculation of interest under section 234A should start only after the revised due dates and not original due dates.
42. No fee should be charged from a person who files the return of income beyond the normal time limit and in whose case, a refund is due as per the return filed.
43. A unified rate of interest be prescribed both for delayed tax payments and refund cases.
XI. Addressing Processing Issues
44. a) It is suggested that rule 37BA(3) be amended, to provide that the credit for TDS be allowed in the assessment year immediately following the financial year in which the tax has been deducted at source
b) Rule 37BA(3) be amended to the extent that in case of default on the part of the deductor for non deposit of tax deducted at source, the deductee should not be denied the credit of such tax deducted and the refund should also be allowed to the deductee.
c) It is requested to make suitable process in place so that the CPC while processing Intimation Order u/s 143(1) considers the TDS Credit Amount reported in the ITR filed by the assessee as “brought forward from earlier year” and allows the same.
XII- Other Matters
45. Ammendments be made to Section 153(3) to specify time limit for passing ‘order-giving-effect’ to order under section 250
46. Deletion of the words “the loss shall not include depreciation” from section 115 JB.
47. Changing the word “and” in 194Q(5) to “or”.
48. Duplication in GST details in income tax forms (serial no. 44 in the tax audit form) be withdrawn as GST returns and audit format are already seeking similar information.
49. Relaxation for E-filing of form 10F by Non-residents.
