Home > Financial Management Services > THE NEW INCOME TAX CODE

THE NEW INCOME TAX CODE

According to me the following are the some of the issues which are to be covered by the proposed New Income Tax Code under various areas without increasing the rates of taxes with the help of increasing the administrative compliance and voluntary compliance by tax payers:-

Welfare of Tax Payer: One-third portion tax paid may be allocated as FUTURE

DEPOSIT without interest which can be utilized for development of infrastructure projects and other long period requirements. This will ensure safety and welfare of the taxpayer for the future years.

  1. Returns: The returns to be filed by tax payers should be asked to file with complete and correct information and computation of tax payable according to the provisions of Acts, any wrong particulars and wrong claim should be punished be severely.
  2. Information: Information should be provided by the tax payers should be made compulsory to include the details of Assets acquired, Liabilities reduced, Major expenditure like Foreign Travels, Functions etc.,
  3. Verifications: Every information provided by the tax payer has to be verified which filed and cross checked with details with the details filed with various departments like local taxes, financial institutions, labor departments and all other concerning authorities. The difference if any should be punished severely. Also the tax payer as to be asked to provide the reasons for difference and opportunity may be given for reconciliation for the difference.
  4. Checking: Every return filed by the tax payer has to be verified by the department in every angle of statutory and legal compliance. Any difference or excess claim should be inform and ask to reconcile, explanation for the difference. Under the head of legal compulsion to accept the returns filed.
  5. Timing: The time limit for verifying or cross checking in return should be allowed within specified time but not afterwards under these circumstances the department has to be more active with regarding administrative steps required and disposal of returns and verifying legality of made by the tax payers which may cause heavy burden on the department. Under such circumstances it advisable to ask the tax payer to submit the legality of the claim made from any responsible and accountable authority or person which will reduce much of the burden of the revenue department.
  6. Encouragement: The tax administrative should work under such circumstances that the Honest Tax Payer should not transform into dishonest due to the every enthusiastic steps taken by the Tax Administration. It is important to note that many of the tax payers want to be honest in paying taxes. The tax payer should be protected for the details disclosed in his returns filed except any deviation is noticed by the department. He should not be asking to substantiate with the evidence which are impractical and beyond his control.
  7. Tax Base: Tax base can be widened by covering many areas which are not yet seen by the revenue department due to lack of time and the hard work required to utilize the information to increase the tax base.
  8. BANK TRANSACTIONS: Firms will have number of accounts, Balances, Transactions but not disclosing all the accounts and the transactions of all accounts.
  9. CROSS VERIFICATIONS: There should be a system of cross verification of information collected from other departments, accounts of creditors, debtors, purchases, sales, outside dealers whether the same reflects in the accounts of the outside dealers.
  10. TAX RECOVERY: Arrears over looked, properties and attached and allowed to be sold. Much stress made on small amounts and number of entries. Big sales with arrears in the names of partners, family members, are over looked.
  11. VARIOUS REPORTS: People, firms, companies file different reports for the same year to different agencies like Income Tax, Sales Tax, Banks and Financial Institutions, Insurance Companies etc.,

With the result the Government is not collecting tax correctly and innocent tax payers are paying more tax. The above expenditure can be dismissed and taxed since it is illegal.

The effect is very high and not to be allowed to go. Illegal planning should be punished.

In the case of arrack cases also many people received huge refunds by wrong partners compared to license names. The same can be recovered. Many of your officers are not going through the legal provisions for the reasons best known to them. This can be stopped to collect and recover the tax wrongly refunded.

STEPS REQUIRED

  1. Cross Verification
  2. TDS Returns Verification
  3. Extracts from Banks, LIC., Govt. Securities
  4. Compulsory filing of funds flow, capital fund account and statement of affairs of assets and liabilities along with Return of Income.
  5. Any additions to the assets, Deletion of Liabilities should be disclosed and explained with evidence.
  6. Investments, Policies, Deposits, Shares all put together by each person to be permitted by the department above THRESHOLD limit.
  7. TDS to be made Compulsory above THRESHOLD limit.
  8. Unbiased and judicial approach by the department.
  9. Only the registered value should be taken as the purchase price.
  10. Every Investment/acquisition of asset is to be brought to the notice of the department.
  11. The Department has to verify each and every aspect, while confirming the Tax Computation.
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