Punjab Accountants Association has submitted a comprehensive representation to Finance Minister Nirmala Sitharaman, proposing several changes to improve tax compliance and reduce the burden on taxpayers. Key suggestions include automatic extensions of tax filing deadlines when they coincide with public holidays, and permanently extending the income tax return due dates for both audited and non-audited cases. They also advocate for the inclusion of deductions under Section 80D for health insurance in the new tax regime and granting Chapter VI-A deductions to senior citizens. Furthermore, they propose repealing or amending Section 43(b)h of the Income Tax Act to ensure timely payments and reduce inconsistencies, as well as including accountants in all GST notices and memoranda to recognize their critical role in financial compliance.
The association emphasizes that extending tax deadlines to avoid public holidays would alleviate undue stress on taxpayers and accountants, ensuring they can fully observe holidays without work-related interruptions. They also highlight the importance of health insurance deductions in the new tax regime to promote healthcare access and financial security. The inclusion of accountants in GST communications would acknowledge their contributions and enhance the efficiency of GST compliance. Overall, these proposals aim to create a more equitable, efficient, and taxpayer-friendly tax system in India.
THE PUNJAB ACCOUNTANT ASSOCIATION
(Regd. Vide No. 304 of 2019-20 under the Societies Registration Act, 1860)
OFFICE : R. K. ASSOCIATES, SEHDEV MARKET, JALANDHAR CITY
E-mail : athepunjab@gmail.com, Mob : 98151-98051, 98780-20386, 98153-23059
Ref. No. :
Dated : 26-06-2024
REPRESENTATION
Proposals for Improving Tax Compliance and Reducing Taxpayer Burden
To
Mrs. Nirmala Sitharaman,
The Hon’ble Finance Minister
Ministry of Finance
Government of India
New Delhi
Subject: Proposals for Automatic Extension of Tax Filing Deadlines on Public Holidays, Extension of Income Tax Due Date for Audited and Non-Audited Returns, Inclusion of Deduction u/s 80D for Health Insurance in New Tax Regime, Grant Chapter VI-A Deductions to Senior Citizens under the New Tax Regime, Repeal or amendment of section 43 (b) h of Income Tax Act and Inclusion of ‘Accountants’ in all GST notices and memoranda
Introduction:
This comprehensive Representation addresses five significant concerns in the current tax system to promote a more equitable and efficient tax environment.
We propose:
1. Automatic extension of tax filing deadlines when they fall on gazetted holidays;
2. Permanent extension of the income tax due date for Audited and Non-Audited Report/Returns from 30th September to 30th November & 31st July to 31st August each year respectively;
3. Inclusion of deduction u/s 80D for Health Insurance in the New Tax Regime;
4. Request to Grant Chapter VI-A Deductions to Senior Citizens under the New Tax Regime
5. Repeal or amendment of section 43 (b) h of Income Tax Act
6. Inclusion of ‘Accountants’ in all GST notices and memoranda
Respected Madam,
We, the members of The Punjab Accountants Association (Regd), an Apex body of Accounts Professionals having representatives from Jalandhar, Amritsar, Ludhiana, Pathankot, Rajpura, Patiala, Mansa, Ferozepur, Phagwara, Hoshiarpur and from almost all the districts of Punjab, having its registered office at Jalandhar, would very humbly like to draw your kind attention towards the following facts :-
AUTOMATIC EXTENSION OF TAX FILING DEADLINES WHEN IT FALLS ON PUBLIC HOLIDAYS
Currently, tax filing deadlines can coincide with gazetted holidays in India. This situation forces taxpayer and the Accounts Professionals to work on these days despite them are being designated for rest and national celebration, which undermines the purpose of such holidays.
This extension is necessary due to the following reasons:
Impact
> Undue Stress and Inconvenience:
Taxpayers and the accounts professionals have to adjust their holiday plans and work during their designated downtime. This results in mental and physical strain, negating the benefits of holidays intended for relaxation and family time.
> Reduced Holiday Value:
The significance of holidays is diminished as taxpayers and the accounts professionals cannot fully engage in celebrations. This disruption can lead to a loss of cultural and social value associated with these holidays.
Proposed Solution
Implement an automatic extension of tax filing deadlines to the next working day, if they fall on a gazetted holiday.
Benefits
♦ Equity:
- Ensures all taxpayers can enjoy holidays without the anxiety of looming deadlines.
- Promotes a fair and considerate tax environment that respects personal time.
♦ Improved Compliance:
- Aligning deadlines with working days creates a more consistent and predictable system for both taxpayers and tax authorities.
- Reduces the likelihood of errors and last-minute submissions.
♦ Respect for Holidays:
- Reinforces the cultural and social significance of public holidays.
- Allows for proper observance and celebration of important occasions without work-related disruptions.
PERMANENT EXTENSION REQUESTED FOR INCOME TAX RETURNS FILING AND AUDIT REPORT SUBMISSION DATES
Current Deadlines:
- Non-audited cases: ITR filing deadline – July 31st
- Audited cases: ITR filing for Audit report submission – September 30th
Proposed Changes:
> Non-audited cases: Extend the ITR filing deadline permanently to August 31st.
> Audited cases: Extend the audit report submission deadline permanently to November 30th.
Justification for Extension:
The current deadlines pose significant challenges due to the following factors:
- Limited Information Availability:
Crucial tax documents like Form 26AS, Form AIS, and TIS (Tax Information Statement) information are typically available only by mid-June. This leaves a very short window (around 1.5 months) to collate information, complete complex tax calculations, and file accurate returns by July 31st.
- Delayed issuance of Form 16 & Form 16-A:
Form 16, which provides taxpayers with a summary of their income and taxes deducted at source (TDS), is typically issued by Employers and other Deductors by 15th June.
- Dependence on Form 16 for Tax Calculations :
Form 16 plays a crucial role in accurately calculating taxes owed by individuals. Information from this form is used to populate forms 26AS (Tax Deduction Statement) and 26S (TCS Statement) on the income tax portal, which become available only in mid-June.
- Limited Time for Tax Return Preparation :
With the availability of forms 26AS and 26S only occurring after 15th June, the current deadline of 31st July leaves taxpayers and the Accounts Professionals with limited time to prepare and file tax returns accurately.
- Compliance Overlap:
July is a busy month for businesses, with deadlines for filing TDS returns and GST (Goods and Services Tax) quarterly returns often coinciding with the ITR filing deadline. This creates a significant compliance burden for taxpayers and tax professionals.
This limited timeframe can lead to:
> Errors in Tax Calculations:
Rushing through the process can lead to mistakes in tax calculations and potential tax liabilities.
> Increased Stress :
The tight deadline can cause unnecessary stress and anxiety for taxpayers.
> Potential for Penalties :
Late filing of returns attracts penalties, which could be avoided with a more reasonable deadline.
Benefits of Extending Deadlines:
♦ Improved Accuracy and Efficiency: A one-month extension provides more time for thorough tax preparation, reducing the risk of errors and penalties.
♦ Reduced Compliance Burden: Spreading out deadlines eases pressure on taxpayers and professionals, allowing for a smoother filing process.
♦ Enhanced Taxpayer Service: Tax professionals can dedicate more personalized attention to client needs, leading to higher-quality tax advice and filings.
♦ Potential Increase in Tax Collection: Improved accuracy and service can lead to better taxpayer compliance and potentially higher tax collection.
A permanent extension for ITR filing and audit report submission would significantly benefit taxpayers, tax professionals, and the overall tax administration. This change would allow for a more efficient, less stressful, and ultimately more productive tax filing season for all stakeholders.
Therefore, we request a permanent extension of the Income Tax due date for filing Individual and all types of ITRs that do not require an Audit, from 31st July to 31st August.
This extension would provide taxpayers with sufficient time to receive their Form 16, utilize the updated tax information on the portal, and prepare their returns accurately.
We believe this change will benefit both taxpayers and the government by;
√ Encouraging Accurate Tax Filings
A longer deadline will allow for more careful preparation and minimize errors.
√ Reducing Filing Stress
A relaxed deadline will ease the burden on taxpayers and enhance their filing experience.
√ Increasing Compliance
A more realistic timeframe can potentially lead to a higher rate of on-time tax filings.
INCLUSION OF DEDUCTION UNDER SECTION 80D FOR HEALTH INSURANCE IN THE NEW TAX REGIME
Importance
- Access to quality healthcare is a fundamental right for every Indian citizen.
The rising cost of medical treatment poses a significant financial burden on individuals and families. Health insurance acts as a vital shield, protecting people from unforeseen medical expenses. By promoting affordability, Health Insurance coverage:
√ Reduces financial hardship during medical emergencies.
√ Encourages timely medical intervention, leading to better health outcomes.
√ Lessens the strain on public healthcare facilities.
Impact of Excluding Section 80D
- The new tax regime’s exclusion of the deduction under Section 80D for Health Insurance premiums discourages individuals from enrolling in health insurance plans. This can have serious consequences, including:
> Increased Out-of-Pocket Expenses:
Individuals may hesitate to seek necessary medical care due to the fear of high costs, potentially leading to delayed diagnosis and treatment.
> Deterioration of Public Health:
A decline in Health Insurance coverage can strain public healthcare systems, impacting the quality of care available to everyone.
> Reduced Financial Security:
Unforeseen medical emergencies can cause significant financial setbacks, jeopardizing an individual’s longterm financial security.
Appeal for Reinstatement
The Punjab Accountants Association strongly urges the government to reconsider the exclusion of Section 80D in the new tax regime. We believe that including this deduction will;
♦ Promote a Culture of Health Awareness:
By making health insurance more affordable, the government can encourage preventive healthcare habits and responsible health management.
♦ Increase Health Insurance Penetration:
A tax benefit will incentivize more individuals to secure health insurance coverage, leading to a healthier population overall.
♦ Strengthen the Healthcare System:
Wider health insurance coverage will contribute to a more robust and financially sustainable healthcare ecosystem.
We propose that the government reinstate the Section 80D deduction for health insurance premiums in the new tax regime. This will not only benefit individuals and their families but also contribute to a healthier and more financially secure future for our nation.
Call to Action
The Punjab Accountants Association urges the government to take immediate action to address this critical issue. We request a meeting to discuss this matter further and explore solutions that promote affordable healthcare access for all citizens.
REQUEST TO GRANT CHAPTER VI-A DEDUCTIONS TO SENIOR CITIZENS UNDER THE NEW TAX REGIME
Issue
- The current new tax regime offers simplified tax filing but excludes deductions under Chapter VI-A, which allows for tax savings on investments for retirement planning, medical expenses, and other essential outlays. This exclusion disadvantages senior citizens, particularly those who have diligently planned for their golden years through these investments. As you are aware, the new tax regime offers simplified tax slabs with fewer deductions. While this simplifies the filing process, it disadvantages senior citizens who previously benefited from deductions under Chapter VI-A (sections 80C, 80D, etc.) for investments, medical expenses, and other essential outlays.
Impact on Senior Citizens:
> Encourages Investment:
Chapter VI-A deductions incentivize senior citizens to invest for their future financial security. With rising medical costs and living expenses, these deductions are crucial for maintaining a comfortable retirement.
> Supports Long-Term Planning:
The old tax regime with Chapter VI-A deductions aligns with the government’s objective of promoting a culture of long-term financial planning, especially for senior citizens.
> Reduces Reliance on Social Security:
By enabling self-sufficiency through tax-advantaged investments, Chapter VI-A deductions can help lessen the burden on social security programs.
Proposed Solutions
♦ We urge you to reconsider this policy and grant senior citizens the option to avail themselves of Chapter VI-A deductions even under the new tax regime. This would provide them with much-needed financial relief and ensure they are not worse off under the new system.
REPEAL OR AMENDMENT OF SECTION 43(b)h OF INCOME TAX ACT
Section 43B of the Income Tax Act, specifically under MSME regulations, poses challenges for business operations due to several inconsistencies and biases. For instance, payments to manufacturers are mandated within 45 days or 15 days, but this rule does not apply to traders. This creates a problem: if traders do not receive timely payments, they are unable to pay manufacturers within the stipulated timeframe. Additionally, businesses whose accounts are not audited are not required to adhere to this 45-day or 15-day payment schedule since their expenses are not disclosed and they file returns on an estimated basis. Consequently, these businesses do not face any penalties for delayed payments, creating an uneven playing field.
The current regulations disrupt the payment chain, affecting the continuity of transactions. To address these issues, the rule should be revised to ensure a seamless process that maintains the integrity of the payment chain. Furthermore, the GST Act should be referenced, as it stipulates that payments must be made within 180 days. If a supplier fails to pay within this period, they must reverse the Input Tax Credit (ITC) and pay interest. Hence, it is essential to amend both laws in a cohesive manner to resolve these discrepancies.
Detailed Explanation and Elaboration:
> Inconsistencies and Biases:
- Payment Terms for Manufacturers vs. Traders:
The rule requires manufacturers to be paid within 45 or 15 days, but traders do not have this obligation. This creates a financial strain on traders who might not have received their payments yet, thus being unable to pay manufacturers within the required timeframe.
- Audited vs. Non-Audited Accounts:
Businesses with non-audited accounts are not bound by the 45-day or 15-day payment rule. These businesses can file their returns based on estimates, leading to a situation where they can delay payments without any penalties, unlike businesses with audited accounts.
> Impact on Payment Chain:
- Disruption:
If payments are delayed at any point in the chain, it affects subsequent payments, leading to a breakdown in the flow of transactions. This disruption can cause significant operational issues for businesses relying on timely payments to manage their cash flow.
> Need for Seamless Integration:
- Rule Revision:
The rule should be modified to create a more consistent and seamless process that applies to all businesses, ensuring that the payment chain remains intact. This would help maintain financial stability across the supply chain.
- Referencing the GST Act:
The GST Act requires payments within 180 days, with penalties for non-compliance. Aligning Section 43B with GST provisions would create a unified framework that ensures timely payments and reduces discrepancies.
> Amending the Laws:
- Unified Framework:
Combining the rules from the Income Tax Act and the GST Act would provide a comprehensive solution that addresses the current gaps and inconsistencies. This would ensure that all businesses, regardless of their size or accounting practices, adhere to the same payment schedules, promoting fairness and stability in the market.
By addressing these issues and revising the laws, businesses would benefit from a more predictable and fair financial environment, reducing the risk of payment delays and ensuring smoother operations across the supply chain.
INCLUSION OF ‘ACCOUNTANTS’ IN ALL GST NOTICES AND MEMORANDA
We, the members of The Punjab Accountants Association, collectively advocate for the recognition and inclusion of ‘Accountants’ in all GST-related communications.
Background and Importance of GST:
Goods and Services Tax (GST) is a critical component of our state’s economic framework. Its successful implementation relies on the collaborative efforts of multiple taxpayers and the professionals, including Accountants. As stewards of financial compliance, accuracy and transparency, Accountants play an indispensable role in ensuring smooth GST operations for businesses across the country.
Observations:
Despite the pivotal role Accountants play, we have observed that public notices and memoranda related to GST predominantly mention advocates, chartered accountants, and other stakeholders. Unfortunately, the significant contribution of Accountants often remains unacknowledged. This oversight not only undermines their efforts, but also perpetuates an incomplete narrative of GST administration.
Recommendation:
In light of the above, we respectfully request that all future GST communications issued by your esteemed Ministry explicitly include Accountants alongside other professionals. By doing so, we can achieve the following;
♦ Morale Boost:
Recognizing Accountants’ contributions will instill pride and motivation within the accounting profession. Acknowledgment in official communications reinforces their sense of purpose and commitment.
♦ Enhanced Efficiency:
Accountants handle a substantial workload related to GST compliance, accurate filings, and financial reporting. Their inclusion in notices and memoranda will enhance overall efficiency and effectiveness in administering GST within the whole nation.
Impact:
By acknowledging Accountants as equal stakeholders in GST matters, we can foster collaboration, transparency, and accountability. The Punjab Accountants Association firmly believes that this small, yet impactful, change will strengthen our nation’s tax ecosystem and contribute to a more robust economic framework.
Conclusion:
We urge the Honorable Finance Minister to consider these proposals for the upcoming budget. Implementing these changes will promote a more considerate, efficient, and taxpayer-friendly tax administration, respecting both the needs of taxpayers and the cultural importance of public holidays.
We believe these changes will significantly improve the tax filing experience, encourage compliance, and enhance the overall efficiency of the tax system in India. By addressing these key issues, the government can demonstrate its commitment to creating a balanced, equitable, and stress-free tax compliance environment for all taxpayers.
Thank you for your time and consideration.
Sincerely yours,
(Dharminder Sikka)
President TPAA
(Varinder Sharma)
General Secretary TPAA
and all members of
THE PUNJAB ACCOUNTANTS ASSOCIATION
