CBDT Chairman P.C. Mody mentioned a tax return is picked up for scrutiny solely in case of mismatch and the place multiple red-flags are being proven by the system
The Dispute Resolution Committee proposed to be arrange within the Budget will have multiple benches which can give alternative to small taxpayers to settle tax issues with out going by the appellate course of, a prime tax official mentioned on February 3.
Central Board of Direct Taxes (CBDT) Chairman P.C. Mody mentioned the I-T division would make out there all the data it’s receiving from varied different businesses like Securities and Exchange Board of India (SEBI) or Ministry of Corporate Affairs (MCA) in kind 26AS to facilitate taxpayers to file appropriate tax returns.
“Our constant endeavour is to ensure that a taxpayer feels motivated to voluntarily comply with tax laws and honest taxpayer gets all facility to which he is entitled to and at the same time the persons who are trying to game the system or trying to take advantage in unfair and undue manner they will also get taken care of,” Mr. Mody mentioned at an Assocham post-Budget occasion.
He added that “this would get strengthen by the constant exchange of information which we are having with CBIC, MCA or SEBI”.
Mr. Mody mentioned a tax return is picked up for scrutiny solely in case of mismatch and the place multiple red-flags are being proven by the system.
Finance Minister Nirmala Sitharaman in her 2021-22 Budget speech mentioned a Dispute Resolution Committee (DRC) could be arrange to assist cut back litigation for small taxpayers. Taxpayer with a taxable revenue up to ₹50 lakh and disputed revenue up to ₹10 lakh can strategy the committee.
Mr. Mody mentioned the considering behind establishing of a DRC was that the settlement fee didn’t actually cater to the decrease finish of the taxpayers.
“So we have tried to provide for some alternative dispute resolution mechanism and, since it would have multiple benches and it would cater to the lower end of the taxpayers, I think this would again give them an opportunity to come out and settle their tax matters without going through the rigorous appellate process,” he mentioned.
With regard to the brand new provision of taxing curiosity on provident fund deposits exceeding ₹2.5 lakh a yr, Finance Ministry, Joint Secretary (Tax Policy and Legislation), Kamlesh Varshney assured that there could be no double taxation and it’ll work precisely in similar method as the way in which curiosity revenue on financial institution fastened deposits is taxed as we speak.
Giving an instance, he mentioned banks deduct 10% tax on the curiosity that’s accrued on fastened deposit. If the tax payers tax slab is increased than 10% then he/she has to pay advance tax, whereas tax payers will get a refund if tax legal responsibility is lower than 10%.
“This system would be completely same [in case of PF]. Whatever contribution you are making to provident fund, whatever is in excess of ₹2.5 lakh, that will be in a separate basket and interest on that particular corpus will be taxable. But it will work exactly in same manner as the way interest income on Fixed Deposit is taxed today,” Mr. Varshney added.
The Budget had mentioned that curiosity on worker contributions to provident fund over ₹2.5 lakh every year could be taxed from April 1, 2021.
Less than 1% of the whole six crore EPFO subscribers really contribute greater than ₹2.5 lakh within the fund.