Thursday , 13 August 2020
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Standing Committee on Finance submits report on personal tax deductions

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Exemptions and deductions in personal income tax, “should be continually revisited, rationalised and eventually scrapped in tandem with moderation of tax rates,” the Standing Committee on Finance recommended in its report on demand for grants. The report backed the government’s move of gradually doing away with deductions, exemptions and complicated tax structure for taxpayers.

“However, terminal benefits available to retiring employees should not be taxed with a view to ensuring social security to senior citizens,” the committee, headed by Jayant Sinha, added in its report presented in Rajya Sabha, Thursday.

The Committee further flagged that cases of fraudulent claims of input tax credit under goods and services tax (GST) based on fake invoices had more than doubled, from 2211 in FY 2018-19, to 5986 in FY 2019-20, even as the Central Board of Indirect Taxes and Customs (CBIC) was using analytical tools and systems generated intelligence to curb tax evasion.

The Committee added that the department of revenue extends the monthly due date for filing Goods and Services Tax (GST) returns to 25th of every month, and has asked the government to sort out “all the festering issues pertaining to GST at the earliest.”

The Committee said that added that the grievances of the states, with regard to compensation cess payments, be duly addressed under the aegis of GST Council so as to keep the states in a sound financial health.

The Committee further added that the revenue department should devise a coherent mechanism for realistic budgetary formulation, followed by proper utilization of allocated funds through effective management and close monitoring, noting that the revenue estimates and underlying assumptions were ‘somewhat opaque.’

The committee however flagged that the government should formulate a focussed policy to increase tax buoyancy and the Tax-GDP ratio in the economy, which in turn would arrest the decline in actual direct tax collection when compared to the previous financial year.

“The government should formulate a focussed policy to increase tax buoyancy and the Tax-GDP ratio in the economy. Taxation of all taxable entities/ transactions/ services, and rationalization of exemptions would pave the way for this purpose. At the enforcement level, a strict view should be taken of tax evasion,” it said.

It added that the Taxpayer’s Charter was a game-changing concept, and that it should be made a law having a statutory authority. The Committee highlighted that the draft Charter should be released to public for wide consultation, and that workshops should be conducted with all stakeholders to get their detailed inputs in writing, before it is introduced as a bill and passed in Parliament.
[“source=economictimes”]