Assocham wants retrospective amendment withdrawn in Budget
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Assocham wants retrospective amendment withdrawn in Budget

Last Updated: Thursday, January 29, 2015, 19:41

Assocham wants retrospective amendment withdrawn in Budget

New Delhi: Pitching for a non-adversarial tax regime, industry body Assocham on Thursday suggested that retrospective amendment be withdrawn in the upcoming Union Budget while calling for e-hearings, quicker IT refunds and raising the tax exemption limits.

Claiming that the atmosphere was "vitiated" due to the retrospective amendment and it drove away global investors by sending them a wrong signal, Assocham Tax Council Chairman Ved Jain said: "We are of the view that retrospective amendment made in the year 2012 should be withdrawn. It will help in improving the environment and instil confidence".

Unveiling the Budget in July last year, Finance Minister Arun Jaitley had assured investors that retrospective amendments to tax laws will be undertaken with extreme caution, and said all fresh cases arising out of the 2012 amendment of I-T Act will be looked into by a high-level CBDT committee.

However, the existing tax disputes, arising out of Retrospective Amendment to the Income-tax Act, 1961, and are pending in Courts, will be allowed to reach their logical conclusions, Jaitley had said.

On the personal income tax slabs, Assocham has suggested raising the I-T exemption limit to Rs 3 lakh from Rs 2.5 lakh at present. It has suggested that income between Rs 3 lakh and Rs 6 lakh be taxed at 10 percent; between Rs 6 lakh and Rs 12 lakh be taxed at 20 percent; and above Rs 12 lakh be taxed at 30 percent respectively.

The Budget for 2014-15 had raised individual income tax limit from Rs 2 lakh to Rs 2.5 lakh for citizens up to 60 years of age and from Rs 2.5 lakh to Rs 3 lakh for persons above 60 years.

Batting for a consistent, fair and non adversarial tax regime, the industry body has suggested that there be a larger body constituted comprising representatives from the industry to give inputs and ideas on the other aspects of Budget, which are not linked to the tax rates.

The chamber has suggested reduction in Corporate Tax and MAT (Minimum Alternate Tax) rates to 25 percent (inclusive of surcharge, cess, other levies) and 10 percent respectively.

At present, the corporate tax rate for resident companies, coupled with surcharge of 5 percent, education cess at 3 percent, results in effective tax rate of 32.45 percent. MAT rate at present is 18.5 percent.

On the housing loan incentive, it has suggested that limit for deduction of interest on housing loans be revised to at least Rs 3 lakh (from existing Rs 2 lakh), whereas the limit for principal loan repayment be increased from Rs 1 lakh to Rs three lakhs.

The industry body has recommended that exemption limit for leave encashment be raised to Rs 10 lakh, as the current limit of Rs 3 lakh was notified way back in 1998 and needs to be raised substantially with immediate effect.

Assocham has also recommended that surcharge, education cess and higher education cess be abolished, arguing that these levies make tax law complex, increase workload and cause confusion.
Industry body Assocham further stated that political parties should pay 30 percent tax on anonymous donations less than Rs 20,000, as is the case with charitable trust or institutions, in its pre-budget memorandum submitted to the Finance Ministry.

To bring about transparency in the public system and end corruption from its root cause, the chamber has suggested that political parties should be brought under the purview of income tax at the rate of 30 percent in respect of anonymous donations received by them and should also be subjected to penalty for not filing return well in time.

"We all know that 80 to 90 percent of the income of the political parties is in respect of income less than Rs 20,000. We have suggested that they need to file a return on this income".

"The way an amendment was made by the Finance Act long time back in 2006, whereby it was provided that in case of a charitable trust or institution if any anonymous donation is received, they need to pay 30 percent tax. We are saying that a similar provision should be introduced for the political parties," Assocham Tax Council Chairman Ved Jain said.

Provisions relevant to anonymous donation received by charitable trust or institution were amended by the Finance Act, 2006 to provide that in case of anonymous donation income tax at the rate of 30 per cent shall be payable by the trust or the institution on such anonymous donation.

The industry body has also suggested that the Government should come out with an Amnesty scheme to unearth black money, where such income is taxed at the rate of 40 percent.

"We have suggested a rate of 40 percent taking into consideration the fact that there has to be some punitive element. In addition, 10 percent (of the amount) has to be subscribed to infrastructure bonds," Jain said.

Besides, Assocham has suggested that the much-awaited Goods and Services Tax be introduced at the earliest, as it will contribute to higher GDP growth.


PTI

First Published: Thursday, January 29, 2015, 18:55




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