By Gaurav Karnik,
Indian Union Budget 2021-22: India’s very first Budget post the onset of Covid-19 was one of the most awaited budgets anticipated to bring in considerable modifications so as to enhance recovery in the economy. The key concentrate of Budget 2021 is on ease of performing company and lowering tax litigation in India by advertising a transparent, effective and successful tax method. While the Budget speech didn’t recommend any main reform, the fine print of the Finance Bill offered considerable amendments.
From a compliance and litigation point of view there have been main modifications. It is proposed to bring revenue tax appellate tribunal (ITAT) proceedings below the faceless regime.
In order to ease litigation for smaller & medium taxpayers(with revenue up to Rs 50 lakh), a dispute resolution committee is proposed to be formed.
A board for advance rulings has been introduced comprising persons of level of Chief Commissioner of revenue tax and the orders passed by such authority becoming appealable to the High Court which was not the case earlier. At the identical time, the Settlement Commission has been discontinued and an interim board for settlements shall be constituted which shall take more than pending applications.
Digitisation becoming at its peak, additional incentive has been announced in the type of exemption for tax audit for persons whose turnover upto Rs 10 crore from current Rs 5 crore exactly where at least 95% of transactions take location via banking channels.
Time limits & due dates for compliance have also been revised such as time limit for completion of normal & very best judgement assessments have been decreased by 3 months, time limit for reopening of assessment has been decreased from 6 years to 3 years and due dates for filing of revised/ belated returns is decreased by 3 months.
Similar to tax collection at supply provisions, tax deduction at supply on buy of goods @ .1% by purchaser has been introduced. However, if such transaction is covered below each TDS and TCS provisions, TDS provisions shall prevail.
On equalisation levy provisions introduced final year, it has been clarified specific elements associated to definition of ‘online sale of goods/ provision of services’ and excluding the transactions which are currently topic to tax as royalty or charge for technical services (FTS) from its ambit.
The exemption introduced final year for sovereign wealth fund and pension funds have been liberalised and rationalised which need to enable spur additional investment in the infrastructure sector. A series of tax exemption have been offered to aircraft leasing providers, relocation of funds to the IFSC and investment divisions of foreign banks positioned in the IFSC.
Keeping the privatisation and disinvestment plans in point of view, situations associated to carry forward of losses and tax neutral demerger for PSUs have been liberalised.
Overall, the Budget 2021 has not only clarified/ expanded the scope of several provisions below the revenue tax law but has also taken a step towards more stringent compliance timelines, thereby accelerating the litigation course of action and removing uncertainty for taxpayers.
The author is Partner & National Leader-Real Estate, EY India