Among the recommendations submitted by industry body FICCI are the further simplification and rationalisation of TDS and TCS provisions, the introduction of a new independent dispute resolution mechanism, a reduction in the holding period for computing capital gains in slump sales, and more.
On the indirect tax side, FICCI has requested the creation of a single Certificate of Origin (COO) for a vessel against multiple Bills of Entry, and the ability to file a single appeal before the Commissioner (Appeals) against multiple BOE assessments.
In a detailed 12-page submission, FICCI has proposed simplification measures on the direct tax side, particularly for compliance with TDS provisions. The industry believes this could ease the compliance burden on taxpayers and reduce litigation arising from disputes over characterisation.
One of the more unique demands is for a tax exemption on reimbursements for daycare expenses. FICCI explains, “Currently, reimbursement of daycare expenses provided by the employer to women employees to encourage them to return to work is taxable as a perquisite. The care economy presents a significant opportunity for both economic growth and the empowerment of women in India. By providing a specific tax exemption on daycare expense reimbursements, the government can support women-led development, enabling more women to participate in the economy and helping create a more balanced and equitable society.”
FICCI also advocates for phasing out the simultaneous application of TDS and TCS provisions (Sections 194Q and 206C(1H)). According to FICCI, “The impact could be reducing the burden, as the interplay of TDS and TCS provisions poses a substantial compliance burden and reconciliation challenges for businesses. Rolling back these provisions for transactions already within the GST regime and/or B2B transactions would significantly reduce compliance burdens on taxpayers.”
On the indirect tax front, FICCI suggests that allowing a Single Certificate of Origin (COO) for a vessel against multiple Bills of Entry would enhance ease of doing business.
Additionally, the chamber recommends permitting a single appeal filing for multiple BOE assessments, extending the benefit of AEO certification to newly incorporated companies within AEO-accredited groups, and addressing BIS certification challenges for importers to further ease business operations.
“Introduction of an amnesty scheme under customs for the resolution of legacy disputes could also help reduce the administrative backlog,” FICCI suggests.
Some of the other direct tax demands include:
- Allowing TDS/TCS credit based on Form 26AS (annual tax credit statement) and dispensing the requirement of issuance of TDS/TCS certificates will relieve compliance burden of the taxpayers.
- Excluding non-resident dividend payouts from the scope of Section 206AB will relieve companies from the onerous compliance burden of ascertaining the existence of PE.
- A dispute resolution forum adjudicated by independent experts will help address matters efficiently at the pre-assessment and post-assessment stages and hence bring down the overall number of disputes. This will also improve the trust factor between the revenue authority and taxpayers as well as enhance ease of doing business.
- Expand the scope of the Dispute Resolution Committee to all taxpayers.
- Provide relaxation from the mandatory stay of demand.
- The introduction of provisions in the Act with binding timelines on actions to be taken by the income tax authorities will bring accountability and transparency in the tax system. This will also improve the trust factor between the revenue authority and taxpayers as well as enhance ease of doing business.
- Issue of notification by CBDT by notifying the effect of MFN clause from date of entry into force of treaties entered by India with third countries will foster certainty and stability in the Indian tax regime
- Providing for non-trigger of provisions of Section 50CA and 56(2)(x) in case of (a) bonafide transactions and (b) where share price moves up between the date of signing and the eventual acquisition/transfer of the shares would provide relief to genuine bonafide transactions.
- The reduction of the holding period of undertaking in section 50B of the Act from 36 months to 24 months would bring simplification and uniformity in the holding period for all capital assets
- Rationalisation of provisions of buy-back, as deemed dividend, would remove anomalies and bring fairness.
- Providing tax neutrality to the delisting of a listed subsidiary through a swap of shares with the listed parent similar to existing provisions for merger, demerger, etc will facilitate listed companies to undertake such transactions without tax hurdles and improve the ease of doing business.
(Edited by : Ajay Vaishnav)
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