Taxes

IT department´s stock and flow problem

Governments, Press, Taxes / By /

Lakhs of tax payers receive notices from the Income tax dept. regarding their expenses or investments being disproportionate to their taxable income for the same year – implying that the expenses or investments are from unaccounted sources. Most cases have simple explanations – the income was declared in a previous year or it is exempt income – facts already available in the tax dept database. Yet lakhs of tax payers have to duel with the tax authorities to prove their credentials. Most people emerge victorious after a long and arduous ordeal costing time and money. The tax department resources are used up in dealing with the honest tax payers & the tax evaders may escape. Harsh’s article in Business Standard on why the tax departments Data Analysis Package can cross tally more information and thus have more pointed search results more likely to net tax evaders while being bothersome for fewer honest tax payers.

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How to make tax officials accountable

Governments, RIA, Taxes / By /

Individual Tax payers have become more vocal as compliance by them has improved significantly and aggregate taxes paid by individuals has overtaken taxes paid by corporates. With that the demands for the tax department to be held accountable have also increased. Unfair treatment such as indefinite delays by the tax department or very low interest paid by them on delayed refunds are no longer acceptable. Harsh’s article in the Business Standard on how accountability can be infused in the Income Tax department using the model of Public Service Guarantee Act enacted by almost all state governments. comments welcome.

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Exit with indexation should be offered

Press, Taxes / By /

Two friends, Ram and Shyam, were travelling on a train when robbers started looting its passengers. Shyam owed some money to Ram. Before the robbers could reach them, Shyam took the money from his pocket and repaid his loan to Ram. Shyam was technically correct in repaying the loan then. Similarly, the Govt.’s move to do away with indexation is technically not a retroactive amendment but it has retroactive impact and is against tax stability. The removal of indexation follows global practices but its abrupt implementation does not. The govt should allow indexation till 2024 with the reduced rates of 12.50%. Opponents will become supporters & the future capital gain taxation will be as per government wishes. The govt can snatch victory from the jaws of defeat as far as the attempt to project a taxpayer friendly image of India is concerned if they announce incorporation of tax admin changes and an enforceable taxpayers charter into the proposed new code.

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Simpler capital gains tax regime highlight of Budget

Press, Taxes / By /

One of the less discussed impact of the budget is the likely reduction in misselling of life insurance policies. The highlight is the simplification of the capital gains regime (at least as far as assets bought from now on are concerned). The situation in respect of past assets bought till 23rd July 2024 remains a little complicated. Harsh’s article in the Business Standard on the impact of the budget.

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Inheritance tax: An idea doomed to failure

Press, Taxes / By /

The idea of an inheritance tax or estate duty is bandied about from time to time. It is in human nature to rejoice at the suffering of those who are better off than themselves. Hence it is attractive for political parties that think short term (are there any political parties that are otherwise??) since it impacts a tiny fraction of the population only. Harsh’s article in Business Standard on why it is an idea that is doomed to failure.

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How to make tax return scrutiny less stressful

Personal Finance, Press, Taxes / By /

Centralised data collection by the Income Tax Department (ITD) has widened the tax base & led to higher tax compliance. Tax payers also benefit as more than 90%+ have their returns (and refunds) accepted within weeks instead of years earlier. The National Faceless assessment scheme (NaFAC) and the National Faceless Apellate Scheme (NFAC) were rung in by the ITD with lofty aims of simplifying the tax administration for those assessee’s whose returns were selected for detailed scrutiny (which remains a large number). Harsh’s article in the Business Standard on how a combination of stiff tax collection targets, overbearing and antioquated attitudes of the ITD officials and a complete lack of accountability had given a bad name to NaFAC and NFAC which otherwise might have taken their place among the host of population scale technologies such as Aadhar, UPI, Account Aggregator and ONDC that have been introduced by India in recent times.

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Track finfluencer earnings, and have alot more RIAs

Press, RIA, Taxes / By /

SEBI has an unenviable task of controlling the unregulated finfluencers and also ensuring that there enough RIAs to educate investors . Information on the income of “Finfluencers” is not easily available which may be inhibiting SEBI from taking preventive action against the finfluencers. Harsh suggest a creative use of the IncomeTax Act to providing real time update on the finfluencers to allow the regulator to concentrate its resources on them. Harsh’s article in Business Standard..

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Limit Section 54 benefit to curb money laundering

Financial, Personal Finance, Press, Taxes / By /

Why the price of your flat is so high? The demand from ” Investors” with black money keeps the flat prices high for genuine users. The exemption for long term capital gains under section 54 encourages such money laundering activities. Harsh’s article in Business standard today suggesting how the government can limit the exemption so as to prevent money laundering and at the same time not impact the genuine buyers who may be upgrading their flats. This tax loophole should be closed to bring down the cost of flats for genuine buyers. Your comments are most welcome

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