Revenue Secretary Sanjay Malhotra on Wednesday said that old cases of angel taxes may be considered under new Direct Tax Vivad se Viswas Scheme. In an interview to businessline, he also indicated that a Bill for new Income Tax Law could be brought in the next budget. Excerpts:
The Budget has proposed announcing a comprehensive review of the Income-tax Act, 1961. Will this be based on the Direct Tax Code as proposed in 2010 or will it be a completely new exercise?
This is a new exercise as most of the issues that are there in the DTC have already been taken up in the Income Tax Act. The primary purpose of this review is to simplify the existing Act, so that it becomes easier to read, easier to understand, and make it concise at the same time. Of course, it will draw upon the work which has been done earlier but this will be done through our own internal committee. We will do a consultation at the appropriate time with various stakeholders and the effort will be to make it concise. There are large number of provisions spread over number of chapters. Then there are a large number of provisos. Effort would be made to present a simple and concise Act. Also, as mentioned in the Budget speech, besides making it concise, effort would be to make it lucid, easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the tax payers. It will also bring down the demand embroiled in litigation.
Since the government has set a time frame for completing it, can we expect a new act in the next Budget?
The speech mentioned that it is proposed to be completed in six months. This means we may see the new Bill in the next Budget.
The Budget has talked about simplification and rationalisation of the tax structure and the endeavour to expand it to the remaining sectors. The GST Council has to take a call on that but what is your take on this exercise?
We have always maintained that there should be lesser number of rates. A group of Ministers is working on recommendations on rate restructuring, based on these, GST Council will discuss and deliberate upon them. We also have always said that taxes should be lower, and the effort would continue.
One key issue is GST on petrol, diesel, ATF, crude oil and natural gas. 101st Constitutional Act does not debar these items from GST but mentions that GST Council will decide about the date of imposition of GST. Present rate of total taxes (Centre and States) is higher than maximum rate of GST (50 per cent) prescribed under the law. Going by the Revenue Neutral Rate (RNR) mechanism for GST, will there be a special rate for petrol and diesel?
Post the introduction of GST, tax rates on various products have come down. The same approach may be applied for petrol and diesel also. However, it is up to the GST Council which will take a final call on rates, timing etc.
One big question is about calculation of long-term capital gain tax (LTCG) on immovable properties. If the property is taken on loan, will the interest also be included in the base for calculation of LTCG under new mechanism which is 12.5 per cent without indexation?
Under existing mechanism, the base price for calculation of LTCG is the price paid to the seller. This does not include interest paid by the buyer, if he or she takes loan to purchase the property. There is no change in this provision which means only the price paid to seller will be taken for calculation of LTCG under the new mechanism.
Buyers also bear stamp duty while purchasing a property. Will this be included in the base price for calculating capital gain?
Payment of Stamp Duty will also not be included in the base price for calculation of capital gain. This is the same position as mentioned in the existing system.
Start-ups are happy over abolition of angel tax. However, there have been a number of past cases under this taxation regime. How those will be resolved?
There will be no new cases registered. However, cases registered in the past will be processed according to the law of that time. Also, the budget has proposed introduction of a Direct Tax Vivad se Vishwas Scheme, 2024 with the objective of providing a mechanism of settlement of disputed issues, thereby reducing litigation without much cost to the exchequer. Old cases related to angel tax may be resolved through this new scheme. The government will notify the new scheme with the date of implementation along with the last date for the scheme.
The Budget has proposed amendments to the Prohibition of Benami Property Transactions Act, 1988. What is the purpose?
There have been cases where it is found that benamidar or any person other than beneficial owner is not dishonest. They can be poor and innocent employee of the beneficiary or even illiterate. So, imposing on them the same penalty as the beneficial owner of such a benami transaction could be disproportionate in nature. Alternatively, if such benamidars were to become approvers, it would help in gathering clinching evidence and details about benami properties and result in convictions of the beneficial owners, thus strengthening the regime. With the amendment, now a benamidar or any person other than the beneficial owner can get immunity from penalty and prosecution if they turn approver against the beneficial owner. This will result in more convictions and more assets getting caught under the Benami Law.
Published on July 24, 2024
