Union Ministry of Finance has released the draft report of 10 member committee headed by Justice R V Easwar (Retd) Committee to simplify the provisions of Income-tax Act, 1961.
- The 78 page draft report contains 27 suggestions for amendments under the Income tax Act, 1961 and 8 recommendations for reform through administrative instructions.
Nearly 65% of the personal income-tax collection in India was through tax deducted at source (TDS).
Recommendations related to TDS:
- TDS rates for individuals and HUFs to be reduced to 5% as against the present 10%.
- For interest on securities, TDS has been raised to Rs 15,000 from Rs 2,500 annually.
- For other interest earnings the limit is recommended to be raised to Rs 15,000 for bank deposits and Rs 5,000 for others.
- Raising TDS limit for payments to contractors from 75,000 annually to Rs 1 lakh annual.
- TDS limit on rent income raised from Rs 1.8 lakh annually to Rs 2.4 lakh.
- Fees for professional or technical services are recommended to be raised to Rs 50,000.
Recommendations to check or curb litigation/facilitate speedier disposal:
- Amendment to Section 255(3) to enhance the monetary limit for SMC cases before the Tribunal to rupees 1 crore from the present rupees 15 lakhs.
- Amendment to Section 254(2) to reduce the time-limit for rectification of orders of the Tribunal from the present four years to 120 days.
- Deletion of section 143(1D) – Avoiding undesirable delay in issue of refunds.
Recommendations to promote ease of doing business and simplify procedures:
- Suggested levying lower short-term capital gains tax on annual earning of less than Rs 5 lakh from trading of shares and not treating it as business income, so as to attract small investors to capital market and cut litigations.
- Doubling the turnover limit for the presumptive income scheme for individual, Hindu Undivided Family or a partnership firm to â‚ą 2 crore annually.
- Introducing the scheme for professionals whose total receipts do not exceed â‚ą 1 crore during the financial year.
- Exemption to non-residents not having Permanent Account Number (PAN), but who furnish their Tax Identification Number (TIN) in their country of residence from the applicability of TDS at a higher rate under section 206AA.
- Timely refund with interest and also providing for payment of higher interest in case of delayed refunds.
- Proposal for mode of payment of TDS and filing of statement of TDS under the provisions of section 200.
In Oct 2015, 10-Member Committee has been formed with an objective to suggest measures to improve the ease of doing business, reduce litigation and accelerate the resolution of tax disputes.
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