In a welcome move, The Finance Minister, has taken steps towards rationalization of tax laws to bring down corruption and also the unwanted litigation. Key changes are being highlighted as below:

1. Income Declaration Scheme, 2016 – Taking forward the steps to control black money and ensure more compliance, the government has proposed a declaration scheme, wherein, undisclosed income and assets can be declared and taxed at 30% rate of tax, with a surcharge of 25% on tax and a penalty of 25%, with no further enquiry, scrutiny and assessment.
2. Providing legal framework for automation of various processes and paperless assessment –The Income tax department has travelled a long way from being a totally manual department to automated income tax return filing and processing being followed today. However, assessments and litigations are still manual and require visits to the local assessing officer. The FM has proposed making required amendments to enable paperless assessments and processes, which will automatically bring down corruption at assessment level and will also contribute towards easier business maintenance.
3. Rationalization of Penalty Provisions – Concealment of income and furnishing of inaccurate particulars of income of income, attracts 100-300% penalty on the escaped tax liability, at the discretion of the assessing officer. This discretion, leads to both corruption and unwanted litigation. To control this, the government has proposed defining concealment and error levels and fixing penalty ranging from 50% to 200% as per the level of escapement or concealment.
4. The Direct Tax Dispute Resolution Scheme – To bring down the litigation at the first level of appeals that is at the Commissioner of Income Tax (Appeals) level, the government has brought a scheme, wherein, the assesse can just pay tax and interest amount and do away with penalty in certain cases pay a nominal amount of penalty and can close the litigation. In most of the cases, the prospective penalty is the primary reason behind litigation.
5. Providing Time Limit for disposing applications – Section 273A, 273AA and 220 are certain sections, wherein, provisions were available for application for immunity from penalty or waiver. However, there was no time limit for disposing the applications, which kept the application pending for years. Now, the government has put in 12 months’ time limit for passing an order in these regards.
6. Time Limit of Assessment – At present the time limit of completion of scrutiny assessment is 2 years from the end of the assessment year. The government has proposed bringing down this time limit to 21 months from the end of the assessment year, keeping in view of automations that are happening in department and also to ensure expeditious closure of assessment.

These steps will definitely help the taxpayers and ease things for them.

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