Surat: The Southern Gujarat Chamber of Commerce and Industry (SGCCI) has raised about 15 critical suggestions concerning the trade and industry of Surat and South Gujarat with the Central Government in its pre-budget memorandum.
The suggestions are as follow:
1.CBDT should issue explanatory SOP
Keeping in mind the various judgments of the Gujarat High Court, CBDT should issue a clarifying SOP like RBI to reduce disputes. During the implementation of the Income Tax Act, judgments have been given by various High Courts in the last few years. Due to such judgments, it becomes difficult for the Assessing Officers working at the field level to implement the law uniformly and properly. As a result, different taxpayers are treated differently in the same situation, which leads to dissatisfaction and widespread disputes among the taxpayers, which is why this demand has been made.
While regulating the banking and financial sector, RBI issues explanatory SOPs from time to time, so that uniform implementation is ensured at the field level and regulatory uncertainty is removed. Similarly, it is very important that the CBDT also develops a practice of issuing explanatory SOPs by analyzing important and far-reaching judgments of the High Courts, till the final decision of the Supreme Court is taken.
Such SOPs can clarify on which issues to appeal, on which issues to not pursue the dispute further and in which situations relief can be given to the taxpayer. This can save unnecessary appeals, repeated litigation and time and cost for both the government and the taxpayer. Besides, it will also help in achieving the objectives of the government like “Ease of Doing Business” and “Non-Adversarial Tax Regime” in a real way.
2. Block Assessment System
Instead of separate scrutiny every year, a system of assessment for a block of 2-3 years should be implemented following international practice. At present, due to separate scrutiny assessment every year in the income tax system, the same issues arise repeatedly, due to which unnecessary administrative burden is imposed on both the taxpayers and the tax administration. Continuous scrutiny reduces business certainty and compliance pressure remains on the taxpayers for a long time. The recent judgment given by the Delhi High Court in Prannoy Roy and Radhika Roy (NDTV) is significant on this issue.
Internationally, the system of assessment for a block of 2 to 3 years is adopted in many developed countries, in which the income, expenditure and compliance of the taxpayer are reviewed simultaneously. Such a system avoids repeated scrutiny on the same issues, saves the time of the tax officials and makes the entire process more efficient.
Implementing block assessment will provide long-term clarity and stability to the taxpayer and will further the objectives of “Ease of Doing Business”. At the same time, it will also enable quality assessment and reduction of disputes for the tax administration.
3. Separate assessment for transfer pricing
Separate assessment processes should be adopted for transfer pricing and non-transfer pricing. Transfer pricing issues are highly technical, based on international standards and require specialized knowledge, while non-transfer pricing assessment is limited to general income tax issues. Taking both under the same assessment process wastes time and creates unnecessary disputes. By arranging separate assessments and special officers for transfer pricing, the process will become more efficient and quality, thereby providing timely conclusions to the taxpayer and significantly reducing long-term litigation.
4. Effective implementation of Section 158AB
Appeals should not be filed in cases where the same issue is pending in the Supreme Court and the practice of protective assessment should be adopted. The purpose of Section 158AB of the Income Tax Act is to avoid repeated appeals when the same legal issue is pending in the Supreme Court. In practice, this provision is not sufficiently implemented at the field level, due to which unnecessary litigation increases. Adoption of protective assessment in such cases will also protect the interests of the government and the taxpayer will not have to be dragged into the appeal process for a long time. This will lead to significant savings in judicial time, administrative resources and costs.
5. Validity of claims made through revised returns
The Act should be amended to not treat claims made through revised returns as invalid.
6. Re-implementation of Explanatory Provisions – Brief Analysis
At present, it is observed that reassessment is initiated on the same issues which are under consideration under appeal, reference or revision, which leads to double proceedings and unnecessary disputes. Such practice undermines the fairness and certainty of the tax system. If the explanatory provision is re-implemented, uniform implementation at the field level will be possible and excessive litigation will be avoided. Moreover, by giving at least 15 days to respond to the show-cause notice issued for reopening the assessment, the taxpayer will get a fair opportunity to prepare properly and give an effective response. This amendment will achieve the objective of “Non-Adversarial Tax Regime” and will increase trust between the taxpayer and the administration.
7. Deadline for filing returns till 31st March
Amended and Belated
The deadline for filing of Ted returns should be kept till March 31.
8. Time limit for refund and additional interest rate
If refund is given within 30 days and there is a delay, there should be provision to pay interest at the rate of 9% per annum.
9. Deduction of Prior Period Expenses
In business transactions, sometimes some expenses, though related to the previous year, are incurred in the current year due to late determination or receipt of bills. As per the current legal position, such expenses are disallowed on technical grounds, due to which the taxpayer has to bear the burden of paying more tax than the actual profit. Allowing actual and business related expenses of the previous period as deductions under Section 37(1) will enable proper computation of income in the current year. This will reduce unnecessary disputes and increase consistency between accounting and taxation. Besides, taxpayers will not have to go through the appeal process and voluntary compliance will be encouraged.
10.Set-off of clear business losses
Business losses under Section 5AD should be allowed to be set-off against profits of other businesses.
11. Relief for MSMEs and Micro Enterprises
The turnover limit of presumptive taxation scheme for micro enterprises should be increased from Rs. 2 crore to Rs. 10 crore.
12. Simplification of TDS rates
To reduce disputes arising out of different TDS rates, TDS slabs should be limited to only 3.
13. Repeal of Section 194Q for GST/B2B transactions
TDS under Section 194Q for B2B transactions under GST should be completely repealed.
14. Exemption from carry forward of losses for startups
Startups registered with DPIIT and startups established in the form of LLP should be given exemption from carry forward of losses and set-off as per section 79.
15. Relaxation in conditions for Updated Return
Relaxation in strict conditions for filing updated return under section 139(8A).
Textile issues
- Zero import duty has been proposed on basic raw material of textiles PTA and MEG.
- Zero import duty has been proposed on MMF yarn (polyester).
- Reduction of basic customs duty on silk yarn HSN code 5002 has been proposed.
- Rs. 1000 crore has been demanded for TTDS scheme or new A-Tuff scheme.
- In the absence of any scheme for setting up a Centre of Excellence, a minimum of Rs. 100 crore has been demanded for a Centre of Excellence.
- Rs. 50 crore has been demanded for old textile schemes like Yarn Bank Scheme, Group Workshed Scheme.
- Rs. 500 crore has been demanded for Sustainable Manufacturing in Textiles.
- It has been demanded that the limit of CFA (Central Financial Assistant) in MSECDP Scheme for MSMEs should be increased to Rs. 50 crore.
- Traders should be added to the definition of Micro and Small Enterprises in such a way that they can get the benefit of Section 43 (B)(H) of Income Tax.
- PLI scheme should be provided for MSMEs to manufacture import substituted products, in which the investment threshold limit should also be revised as per the definition of MSME.
- Special incentive scheme should be announced for MSMEs to carry out product development and research and development.
- Speciality chemical sector should be given infrastructure status and bank credit benefits should be given accordingly.
- Special funds should be allocated for the development of domestic and international air cargo at various places in the country to reduce logistics costs.
