India Inc seeks reintroduction of single I-T structure

New Delhi: Industry has sought reintroduction of the single structure of income tax instead of the current one that gives two options to taxpayers, saying that it had made compliance on withholding tax a complex process for employers, leading to higher cost and tax leakages.This was among several recommendations made by the Confederation of Indian Industry (CII) to the finance ministry ahead of the union budget announcement.Finance minister Nirmala Sitharaman had introduced a new taxation regime from April 1, 2020, whereby individual and Hindu undivided family taxpayers could pay income tax at a lower rate from April 1, 2020, provided they didn’t take any tax exemptions, or pay at the existing rates after availing of the exemptions. Taxpayers were to choose one of the options at the beginning of the year, but would be able to change it at the time of filing returns, which is expected in July 2021.“For a vast country like India, it has created more confusion for the taxpayer than a relief … it has further made withholding tax compliance complex for the employer,” the CII said in its representation.Industry has also sought lower tax rates for individuals to tide over job losses some may have faced during the Covid-19 pandemic. “Most of employees have faced reductions in salary. Pandemic has impacted the financial positions of individuals badly,” it said.Taking into consideration rising food inflation over the last decade, the CII suggested that the current exemption of Rs 50 per meal per employee if the employer is providing food to be increased to Rs 200. The exemption that exists for paper vouchers should be extended also to digital vouchers, it said.On the corporate side, industry has sought that limited liability partnerships and companies be taxed at the same rate of 25% instead of LLPs getting taxed at 30%. The change will help investors select the optimal governance model and remove any confusion, it said.The federation suggested that the process of filing appeals with the commissioner of income tax be replaced with a review of orders passed by tax officers by a dispute resolution panel, to help reduce prolonged litigation.The setoff period of losses for companies that have a gestation period of more than 10 years, should be extended to 15 years from the current limit of eight years, it said. “It will allow companies to have a long-term sustainable business model in India with a long-term investment horizon to gain stability and profitability.”

from Economic Times https://ift.tt/38RLjZ8