Krishna Mohan Prasad
1. This is the 8th issue of e-journal ‘Taxalogue’, my last as Editor-in-Chief, as I am superannuating on 31st August, 2021. The first issue was released on Aayakar Diwas on 24th July, 2019 at Dr. Ambedkar International Centre, New Delhi by Hon’ble Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman.
2. In the last seven issues, kaleidoscope of ideas in the form of 125 articles have been published under the heads ‘Assessment’, ‘Dispute Resolution’, ‘Best Practices’, ‘Exemptions’, ‘International Taxation’, ‘Penalties’, ‘Tax History’, ‘Tax policies’, ‘TDS’, ‘Transfer Pricing’, ‘Faceless e-Assessment’, ‘Ideation’, ‘Economy’, ‘Budget’, ‘Income-tax Settlement Commission’, ‘NCLT’, ‘Angel Taxation’, ‘Search and Seizure’, ‘Litigation Management’, ‘Agriculture Income-tax’, ‘Leaderspeak’, ‘Audit’, ‘Income Computation and Disclosure Standard(ICDS)’ and ‘Taxpayer Advocacy’. The authors of the articles have been serving and superannuated IRS officers, retired Justice of the Supreme Court and Departmental Counsels. In this issue and in the subsequent issues, list of articles published in the past issues of ‘Taxalogue’ containing name of the topic, issue number, title of the article and name of the author is proposed to be published for easy referencing.
3. This issue incorporates very interesting articles on a variety of topics. The articles briefly stated are:
i. ‘Sports in Section 2(15) of Income-tax Act, 1961’ highlights the need of including sports, a field of eminent importance, in the definition of ‘charitable purpose’ bringing sports at par with yoga.
ii. ‘46 Significant Direct Tax Issues before the Supreme Court’ is very useful which brings out highly litigated matters before the Apex Court, the resolution of which will dispose off 791 cases that have disputed tax of more than Rs. 1 Lakh Crore representing approx. 80% of the disputed tax and 20% of the total Departmental SLPs pending in the Apex Court. It shall also have cascading effect on reduction of existing and future litigation.
iii. ‘Evolution of Search Assessments’ is a commentary in itself outlining the guiding principles on search assessments.
iv. ‘Alternative Tax Dispute Resolution via Technological (Faceless) Way’ is thought provoking.
v. ‘Taxation of Agricultural Income in India’ gives a comprehensive view on historical perspective of taxation of Agricultural Income.
vi. ‘Demystifying Global Minimum Tax’ is a well-researched article on the problem of global corporate tax abuse. It discusses the G7 proposals on this issue, considered very recently.
vii. ‘Applicability of provisions of Section 115BBE specifically in the year of Search/Survey where the unrecorded stock/cash etc. are offered suo moto in ROI’ is very well written and based on strong arguments.
viii. ‘Approval under Section 153D does not mean that search assessment proceedings were jointly done by the AO and the Range Head’ is very relevant as it wades into the controversy about the scope of approval given by the Range Head under Section 153D‘.
ix. ‘The PE’s Bloodline’ discusses the origin, concept and history of ‘Permanent Establishment’.
x. ‘Application of Section 115BBE to Income offered in Tax Return in consequence to Detection/ Admission/Surrender during Search & Seizure or Survey Proceedings’ explains the provisions and its judicial journey.
xi. ‘New Regime of penalty under Section 270A’ is very well drafted which made easy the understanding of newly introduced provisions of penalty.
xii. ‘Transfer Pricing “Financial Transactions”- Settled Issues & Case Laws in Favour of Revenue’ is very well-researched.
xiii.‘Convergence of the wings of International Taxation & Transfer Pricing’ gives a detailed overview of the functions of International Taxation and Transfer Pricing wings and the justification for their convergence.
xiv. ‘Urban bad debts write off by Banks – A ticklish issue’ is very well drafted with examples clearly bringing out the misuse of various provision of section 36 of the Income Tax Act.
4. Most members of the Editorial Board of ‘Taxalogue’ have shown perseverance, wisdom and enthusiasm, so has most officers of the Directorate of Legal & Research and I am sure, this e-magazine shall continue to be a strong forum of exchange of ideas on tax matters as times go by.
5. Some officers have stated that they do not write article fearing that it may be construed as criticism of existing policy or working and they may face difficulties. Due to this, many wise ideas remain dormant. The writers are expected to identify the problems, discuss the issues involved and suggest solutions and present it in a scientific manner, so that the article is not a criticism of existing policy but an attempt to improve the existing weaknesses. As a couplet of Waseem Barelvi says:
6. Our beloved Late FM, Shri Arun Jaitley at the Vibrant Gujarat Global Summit 2017 stated;
“We are substantially in terms of taxation, a non-compliance society. The narrowness of our tax base is realized by the data. Formal transactions can lead to higher revenues, and make us more compliant.”
For making India a tax compliant nation it is desirable that Paradigm Shift in narrative about tax payment is done. In this regard suggestions are:
(a) Highlighting that paying tax is not a burden but a pious national duty;
(b) Inculcating a sense of joy and pride in paying tax;
(c) Emphasizing that paying tax is more charitable than charity itself; as taxes are used for promotion of education, health, environment, relief to poor, national security, national development;
(d) Raising awareness that by tax evasion or avoidance, one keeps nation’s money for personal use, mostly for conspicuous consumption;
(e) Shifting emphasis from the pride of being rich by inheritance or having wealth to lifetime tax paid of individual and companies.
6.1 More effective compliance management is needed towards Tax Payer’s Service and checking tax evasion following the motto, ‘the biggest service to existing honest tax payers is to stop tax leakages’.
6.2 Tax policy is a constant work in progress and removal of toxicity in tax laws is required so as to also minimize pain of tax litigation.
6.3 Tax education is required to be included in the school curriculum to make Indians tax- literate.
6.4 Tax Subsidy is a major issue as in last two year as the direct tax subsidy computed in the Budget 2021 is at Rs. 4.23 Lakh Crores. The Budget, 2021-22 in ANNEX-7, provides Statement of Revenue Impact of Tax Incentive under the Central Tax System. Such impact for Financial Years 2018-19 & 2019-20 for Corporate Tax is at Rs. 1,08,113 Cr. and Rs. 99,842 Cr. respectively, for Firm, AOP, BOI is at Rs. 6,804 Cr. and Rs. 6,283 Cr. respectively and for Individual IT is at Rs. 95,377 Cr. and Rs. 1,06,532 Cr. respectively. Further, the exemption of Income to 2,26,531 Charitable entities for FY 2018-19 has been computed at Rs 7.35 Lakh Crore. It’s a matter of serious consideration and research how the tax subsidy may be gradually reduced to augment tax revenue and bring equity amongst tax payers and whether a floor rate of tax on all income of all entities is required to be introduced.
6.5 The Tax Administration must always follow the mantra of efficiency, transparency and accountability.
7. Let’s remind ourselves of the beautiful and inspiring words from poem “Stopping by Woods on a Snowy Evening” of Robert Frost:
“The woods are lovely, dark and deep.
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.”
Krishna Mohan Prasad
Member, CBDT
Editor-in-Chief, ’Taxalogue’
On behalf of Editorial Board
The Tax Administration must always follow the mantra of efficiency, transparency and accountability and all these things should be looking in the mind the position of the assessee, it business structure, client base, product service and even area of service and employment but not universal application while proceedings the matter to determine income or value of the transaction.