Memorandum containing suggestions for Budget 2023 by CCI Professionals Forum with request to consider annoucing another Disclosure Scheme and Vivad Se Vishwas Scheme in national interest.
CCI PROFESSIONALS’ FORUM
(A unit of Calcutta Citizens’ Initiative)
3, Ho Chi Minh Sarani, Ground Floor, Kolkata 700071
Email npjainadv@gmail.com (M) 98309 51252 Ph – 033-40661000
7th January, 2023
URGENT
Smt. Nirmala Sitharaman
Hon’ble Minister of Finance and Corporate Affairs
Government of India
Department of Revenue
North Block
New Delhi – 110001
fmo@nic.in
Respected Madam,
At the outset we convey our good wishes for NEW YEAR. We would like to make the following suggestions as our Pre- Budget Memorandum for 2023-24, going to be presented on February 1:
1. Relief to Salaried & Middle class: We expect some relief to the salaried class and middle class through the rationalisation of rates and tax slabs so that they can have sufficient money to lead their day to day life and can cope up with increasing household, education of children and medical expenses. A reduction in the rates of personal income tax in the government’s next push for reform will increase disposable income and revive the demand cycle.
2. Another Disclosure Scheme & a scheme to end tax disputes needed Black Money is a big issue in our country. The Government had hope that demonetisation of currency notes of Rs.500 and Rs.1000 as announced on 8th November 2016 will help is tackling the problem and the undisclosed currency notes in circulation will be controlled. However despite demonetisation and the efforts of Government in promoting transactions by banking channel and credit cards, debit cards, Paytm etc. still the currency in circulation has not reduced, rather it has increased in last 6 years.
a) Another disclosure scheme: Income Declaration Scheme was last declared in the Finance Act, 2016. Section 184 provided that the undisclosed income declared under section 183 within the time specified therein shall be chargeable to tax at the rate of 30 per cent of such undisclosed income. Further the amount of tax chargeable under the scheme was to be increased by a surcharge, to be called the Krishi Kalyan Cess on tax calculated at the rate of 25 per cent of such tax so as to fulfil the commitment of the Government for the welfare of the farmers. Then the person making a declaration of undisclosed income shall, in addition to tax and surcharge under section 184, was also liable to penalty at the rate of 25 per cent of such tax. Thus effectively aggregate tax burden etc. was 45 per cent of undisclosed income declared under the scheme. The amount of tax, surcharge penalty was allowed to be deposited in cash vide CBDT Instruction dated 8th September, 2016.
b) The scheme was in operation from 1st June, 2016 to the midnight of 30th September, 2016 with an aggregate of Rs.65250 Crore worth of hitherto undeclared incomes in the form of cash and other assets being declared.
c) However, the amount declared was not up to mark in view of undisclosed money and assets amassed by the public. That was followed by demonetisation.
d) According to prevalent situation, there is considerable scope of further declaration of undisclosed income and therefore the Hon’ble Finance Minister will do well in considering and declaring Income declaration scheme, 2023 with the similar rate of tax, surcharge and penalty on the pattern of 2016 scheme. It is expected to garner undisclosed income and assets of about Rs. One Lakh Crore.
3. Please consider another Vivad Se Vishwas Scheme:
The Vivad Se Vishwas Scheme, 2020 was declared to minimise the tax cases pending in appeal in various forums and it was quite well meaning ans successful scheme. Numerous taxpayers availed the scheme to get rid of disputes. Through Vivad se Vishwas 2020, the Central Board of Direct Taxes was able to collect tax of as much as 54000 Crore and Central Board of Excise and Custom garnered Rs.38000 Crore. Such a scheme may be announced again to reduce the pending litigations. Such a strategy will be useful for the department as well as taxpayers in getting rid of long drawn appeals pending n various forums. However the scheme may be reviewed and further simplified.
4. Liberal Tax Rates:
The Budget 2023 to be presented by the Finance Minister will be last full budget of Modi Government, and elections are in offing this year in many States to be followed by General elections sometime in April/ May 2024. The Hon’ble Finance Minister will do well by declaring exemption limit upto Rs.5 Lakhs. As a matter of fact even now a tax rebate of Rs.12500 is allowed under section 87A that means if income of any person is upto Rs,5 Lakhs he need not pay tax. However, for ensuring ease of doing business, the straight exemption of Rs. 5 Lakh for all taxpayers will be appreciated and will help people in coping with the prevailing inflation and lesser resources. Some more money in pocket if taxpayer will help in growth of demand and economy as a whole.
5. Tax Rates in case of Individuals:
a) The highest tax and surcharge etc payable by Individual taxpayers is as much as 42.74 per cent in case of taxpayers having income exceeding Rs. 5 crore as they have t pay a surcharge of 37 per cent. It comprises of 30 per cent tax, 37 per cent surcharge that makes 41.1 per cent and then 4 per cent Health and education cess is to be added which makes an aggregarte effective rate of 42.74 per cent.
b) In contrast in case of domestic companies the tax rate is only 22 per cent which does not claim any deduction or exemption under sec. 10AA and deductions under sec. 32AD, 33AB, 33ABA, 35(1)(ii), 35(1)(iia), 35(1)(iii), 35 (2AA), 35(2AB) 35AD, 35CCC, 35CCD and does not claim deductions under chapter VIA (other than sec. 80JJAA or sec. 80M). In such cases the aggregate tax burden comes to 25.17 per cent (including 10 per cent surcharge and 4 per cent Health and education cess.
c) It is expected that our Hon’ble Finance Minister will peg up the rate of tax n case of Individuals to 22 per cent and also limit surcharge to only 10 per cent. The FM should appreciate that non-corporate taxpayers are also important in economic growth. It is accepted fact that lower tax rates help in greater tax collections.
6. Presumptive Income in case of professionals under sec. 44ADA: The Presumptive Income is case of professionals is considered under section 44ADA at the rate of 50 per cent of gross receipts which is quite excessive even while we compare with the presumptive income of 8 per cent or 6 per cent, as the case may be, for computing profit and gains of business, as prescribed under section 44AD. The presumptive income in case of professionals should be at the rate of 30 per cent of gross receipts. It may be noted that RV Easwar Committee had suggested the rate of one third of gross receipt of professional receipts. The realistic presumptive rate will encourage more and more professional to opt for the scheme under section 44ADA. Other professions like Journalism, Authors, Writers etc. should be included in the definition of permitted professions for this purpose in addition to professions referred to in sec. 44AA(1).
7. Please consider and allow deduction for corporate social responsibility expenditure Sec. 37: At present the Income Tax Act provides that the expenses incurred by the taxpayer on the activities relating to CSR referred to in Section 135 of the Companies Act, 2013 shall not be deemed to be incurred for the purpose of business and hence, shall not be allowed as a deduction for computation of income. The corporate sector spending on CSR is for laudable purposes and effectively assisting the Government in undertaking social projects for the contry. Therefore, the deduction must be allowed for expenses on CSR for the purpose of Income tax. It is recommended that a deduction of CSR expenses incurred by the taxpayers pursuant to the policy of the Central Government and provisions of the Companies Act should be allowed in computing business income.
8. The incentives should be provided for encouraging small and MSME industries so that more jobs may be created.
9. Alternate Minimum Tax under sec. 115JC for non-corporate taxpayers: The present rate is 18.5 per cent of adjusted total income (ignoring the deductions under chapter VIA-C). The rate should be lowered to 12 per cent and the adjusted total income should be computed after allowing deductions under chapter VIA.
Kindly consider the above suggestions. We assure your honour of our full co-operation in encouraging taxpayers to make proper tax compliance.
NARAYANJAIN
President, CCI Professionals Forum
Email npjainadv@gmail.com
M 98309 51252
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