New Tax Code : Modified version released : Savings safe in revisions that promise breathers, Home Loan interest remains exempted.

Salary-earners worried about retirement can let out an “EEE” in glee.

The Centre has dropped a proposal to tax pension savings while withdrawing the money on maturity.

This means it will continue with the policy of EEE (exempt, exempt, exempt) at all three stages of savings and will not opt for a proposed EET (exempt, exempt and tax at withdrawal).

The modification was announced in revisions to a direct tax code the Centre proposes to implement from next year. The revised code has promised several other sops to the middle class.

The tax code, which will be introduced in Parliament in the coming monsoon session, is expected to simplify tax rules, raise tax slabs and lift the ceiling for tax-free savings to Rs 3 lakh from Rs 1.6 lakh now. If all these promises are fulfilled, the total outgo for the salaried class will go down.

The plan to tax the savings at the last stage had sent shivers down the spine of those who were saving for post-retirement. The modifications suggest that the government did pay attention to the sense of disquiet.

Revenue secretary Sunil Mitra said: “We prepared the revised discussion paper on the basis of some 1,600 comments and suggestions we received.”

A realisation by tax collectors that EET would mean huge increase in paperwork also played a part in its burial.

The revised paper, too, will be open to changes based on suggestions which people can send over the next 15 days, the secretary said.

The comment box can be accessed on the Internet on the site finmin.nic.in. If a user clicks on “new discussion paper related to direct taxes code” in the update box, the comment box can be reached.

Source : The Telegraph.


View the proposed Revised Tax Code

Income Tax Welfare Fund with a Corpus of Rs.100 Crore Operationalised after 12 Years

Finance Minister asks CBDT to Address the Issue of Unwanted Litigation with Taxpayers and Realise Locked up Revenue in Appeals 

Finance Minister, Shri Pranab Mukherjee announced the operationalisation of the income tax welfare fund which was pending since 1998. The fund has a corpus of Rs.100crore and will be available for welfare activities of the employees of the income tax department. The finance Minister made this announcement while addressing the Annual Conference of Chief Commissioners and Director Generals of Income Tax, here today. The Finance Minister also announced that in order to upgrade the skills of the IRS officers, an advance mid-career training programme for them would be started during the current year. This will equip officers to face challenges dealing with complex international transactions and fight menace of tax avoidance schemes using tax havens and low tax jurisdiction.The Finance Minister also asked CBDT to ensure deployment of human resources in consonance with requirement of the tax laws. In this regard, he specifically asked for timely completion of exercise of cadre restructuring and hold regular departmental promotional committee (DPC) as per the DoPT calendar. The Finance Minister advocated the need to focus on preventive vigilance and adopt a strategy for zero tolerance for corruption. He asked CBDT to set up a Committee to examine the vigilance practices and procedures in few select countries. The experience of other countries can be used to streamline and strengthen the vigilance administration in Income Tax department. In order to provide the services to the taxpayers of desired quality, the Finance Minister stressed that the same become technology driven. For the current year, the Finance Minister asked senior officers of the income tax department to exceed the target of direct tax collection at Rs. 4,30,000 crore in the Budget estimates. He asked the department to adopt special strategy to monitor TDS compliance at the District level, State level and at Central level. 

In the end, the Finance Minister expressed his concerns over the rising litigation with the taxpayers and the quantum of revenue locked in appeals. He stated that taxpayers should be encouraged to Mutual Agreement Procedure (MAP) which has emerged as a preferred alternate dispute resolution mechanism. He asked CBDT to come out with a comprehensive proposal to address the issue of unwanted litigation with taxpayers and also to realise locked up revenue in appeals. 

Following is the complete text of the Finance Minister’s speech:- 

“Direct Taxes, now the major resource provider to the Central Government, have grown at an average annual rate of 24 percent in the last five years and have nearly trebled from Rs.1,32,771 crore in financial year 2004-05 to about Rs.3,78,000 crore in financial year 2009-10, increasing its share from 4.1 percent to 6.1 percent of the Gross Domestic Product (GDP). This tremendous growth has been made possible not only due to rationalisation of tax structure and improvement in tax administration leading to better tax compliance, but also persistent and unrelenting efforts of employees of theIncome Tax department. 

To improve compliance further, tax laws need to be simple, stable and robust; tax rates should remain moderate; and multiplicity of tax exemptions and deductions should be gradually phased out in order to widen and deepen the tax base. Tax administration needs to be further toned up by appropriate use of technology on the one hand, and improving professional competence and responsiveness of the employees on the other. 

A major tax reform initiative has already been announced in the proposed ‘Direct Taxes Code 2009’ to simplify, rationalize and consolidate the laws and procedure, relating to direct taxes. Its draft is under revision, taking into consideration the areas of concern expressed by various stakeholders, and the discussion paper will be shortly in the public domain before introduction in Parliament in the forthcoming monsoon session. It will indeed be legislation for the 21st century, which will witness the emergence of an economically strong and vibrant India. I anticipate that the new code will usher in major changes in procedures and practices of Direct Tax. The Department, therefore, needs to draw a roadmap for administratively meeting the challenges and the changes that will be introduced by the new Code. The Human Resource Directorate of the Department should draw up plans for training in cooperation with tax training institutes for capacity building for implementation of theDirect Tax Code. The transition from existing law to DTC would require completion of delegated legislation in a time bound manner. CBDT should ensure smooth transition by planning the activities schedule well in advance. 

Growth in international trade and commerce driven by globalisation is throwing up new and complex challenges. Globalization offers a global market for product and services but at the same time it also poses challenges. The recent financial crisis has shown how an economic difficulty of one country can get exported to other countries. Similarly, the development of tax shelter products and use of tax havens is another challenge which emanates from globalization. In our response to global challenges we have set up two Income Tax Overseas Units (ITOUs) within Indian Missions in Singapore and Mauritius to facilitate exchange of information. Eight more such units in USA, UK, Netherlands, Japan, Cyprus, Germany, France and UAE are also being created on similar lines. I am hopeful that these measures would result in seamless flow of tax related information from foreign tax jurisdictions and would strengthen our fight against menace of tax evasion using cross border transactions . 

The department needs to improve its infrastructure to match global standards of delivery of taxpayer services. The effective roll out of Sevottam and Aayakar Sewa Kendra (ASK) would require adequate infrastructure. It is necessary to make the infrastructure state-of-the art to improve the working environment and to make a visit to the tax office a pleasant experience. Processing of tax returns, now done on the National Computer Network, has to be made more efficient. Towards this, two more Centralized Processing Centres (CPCs) at Pune and Manesar should be set up expeditiously. Efforts should be made to further popularise and increase electronic filing of tax returns and electronic payment of taxes to reduce paper-work and make taxpayer services environmentally friendly. The scope of Large Taxpayer Units (LTUs), presently operational in four metropolitan cities, needs to be expanded for deepening of tax base as well as for centralized services to large taxpayers.

While taxpayer services have improved there are still large numbers of taxpayer grievances, including grievances relating to tax refunds and credit of TDS, which need to be attended on urgent basis. At the systemic level CBDT should ensure that Directorate of Systems take immediate steps to streamline the issue of credit of TDS. Apart from systemic changes, the grievance redressal mechanism including Ombudsman need to be integrated and streamlined. A holistic approach needs to be developed to cater to the rising expectations of taxpayers. The CBDT should immediately come up with a comprehensive and net-based grievance redressal mechanism in line with the best global practices. 

A number of services offered by the department have become technology driven. It may not be possible to deliver the services of desired quality in the existing structure of tax administration. CBDT may come out with a new structure, which leads to faster adoption of technology and innovation. The CBDT may, therefore, consider hiving off its technology driven taxpayer services to a Special Purpose Vehicle (SPV), which can better deliver such services in the public-private-partnership mode. This will lead to innovation in delivery of services to taxpayers and also involvement of public in delivering the services. 

For the current financial year, the direct tax collection target has been fixed in the Budget Estimates at Rs.4,30,000 crore at a growth of 13.7 percent over the actual collection last year. We have deliberately called this conference in the beginning of the financial year to deliberate strategies and draw action plan to achieve this target. Apart from concentrating on big cities and towns, Department should also look to smaller towns and cities for widening of tax base. The smaller towns and centres have emerged as centres of growth due to inclusive growth agenda of Government. Department may also develop special strategies to monitor TDS compliance at the District level, state level and at Central level. 

The GDP is poised to grow at 8.5 percent during 2010-11. Sectors of the economy performing well should be monitored for tax compliance and we should get our due taxes. The department should also make attempts to widen and deepen the tax-base further. It should improve utilization of information relating to high value transactions available through Annual Information Returns (AIR), Central Information Branches (CIB) and other sources. Using multisource data, Department should refine risk profiling of taxpayers and assessments and investigations should be carried out accordingly. Using this intelligence data department should develop credible deterrence for taxpayers, who are habitual tax evaders. 

Skills of the personnel working in the department need constant up gradation in view of changing tax regulations, technology and global economic environment. Though I find that the CBDT has taken some steps in this direction through Knowledge Management by yearly publication of the book titled “Let us Share”, containing the best orders and practices, yet further steps need to be expeditiously taken in its training and skill up gradation programmes adopting the best global practices. I understand that CBDT is already providing exposure to probationers at NADT about international practices through international attachments. This has to be taken forward by suitably designing mid-career training programmes for officers at regular intervals. This will equip officers to face challenges of dealing with complex international transactions and menace of tax avoidance schemes using tax havens and low tax jurisdictions. This will also help us in getting our due share of taxes especially from cross border transactions. 

I am happy to announce that Advanced Mid-Career Training Programme (AMCTP) for IRS officers would be started during the current year. 

A satisfied work force is the backbone and strength of an organization. We have modified the transfer policy for the Indian Revenue Service (IRS) officers to improve satisfaction levels and minimise unwarranted service litigation with our own employees. The Standing Committee on Finance, in its report for 2009-10, has expressed concern about shortages of manpower in the Department. This needs to be addressed urgently, especially in the face of the exponentially increasing workload, and the challenges of maximising revenue generation along with efficient taxpayer service. I am told that cadre restructuring of CBDT is pending for quite some time, which has adversely affected the implementation of core areas of work in the Income Tax department. The tax laws can be implemented effectively by aligning the tax administration with the intent of tax policy. If there is a mismatch, then it may be difficult to implement a tax policy, however good it may be. CBDT should ensure that deployment of human resources is in consonance with requirement of the tax laws and this should be ensured by completing the timely exercise of cadre restructuring and by holding regular departmental promotional committee (DPC) as per the DoPT calendar. In the long term, we should aim for Human Resource policy which is, conducive for specialisation, promotes administrative innovation, provides equal opportunity and keeps employees in high state of motivation. 

In the last year’s conference, I had emphasised the need for expediting vigilance matters. I find that though there is improvement, the progress is not at the desired levels. More focussed approach with proper adherence to prescribed time-lines is needed to expedite vigilance matters. I want to see that no charge sheets are filed against our own employees at the last day of retirement after more than 30 years of service to Government. We should ensure that guilty is punished but at the same time ensuring that those who have performed their duties and victims of frivolous complaints should be adequately protected. Department need to focus on preventive vigilance and adopt a strategy for zero tolerance for corruption. CBDT should set up a committee to examine the vigilance practices and procedures in few select countries. The experience of other countries can be used to streamline and strengthen the vigilance administration in Income Tax department. 

The rising litigation with the taxpayers and the quantum of revenue locked in appeals is a matter of serious concern. The strengthening of Settlement Commission, setting up Dispute Resolution Panel (DRP) may address the litigation issues with the taxpayers to some extent. I am told that under mutual agreement procedure (MAP) negotiations under Indo-USA DTAA a tax demand of Rs.800 crore in 48 cases has been confirmed. This is a good development and tax-payers should be encouraged to invoke MAP, which has emerged as a preferred alternate dispute resolution mechanism. In spite of these efforts, we need to develop more strategies to reduce the litigation with the taxpayers. I would like CBDT to come out with a comprehensive proposal to address the issue of unwanted litigation with taxpayers and also to realise locked up revenue in appeals. 

Before I close, I am happy to announce the operationalisation of the Income Tax Welfare Fund, which was pending since 1998. The Fund has a corpus of Rs.100 crore kept in interest-bearing deposit. The interest earned annually on this deposit, and other annual accruals to the Fund, will be available for welfare activities of employees of the Income Tax department. I am sure that CBDT will come out with innovative welfare measures, which will further motivate employees of the Department to excel in their area of work. 

I wish this Annual Conference a great success. I would be looking forward to the outcomes of the deliberations.”

Income Tax Dept taken steps to ease return filing.

The Central Board of Direct Taxes (CBDT) have directed the Income Tax Department (ITD) to make arrangements for receiving income tax returns on 31st July 2010, the due date for filing tax returns by most taxpayers, as that day happens to be a Saturday. ITD has also been asked to make special arrangements by setting up additional counters from 28th July to 31st July 2010, to facilitate taxpayers in filing their income tax returns.In Delhi, special counters will be set up in Pragati Maidan, as in earlier years, to receive about 5 lakh income tax returns that are filed in the last few days. The Chief Commissioner of Income Tax, Delhi, will later announce the details of the special arrangements made for the taxpayers of
Delhi. Counters will be opened to give additional and value-added services such as free return forms, photocopy, PAN application and information, efiling, help desk, etc. Separate counters will also be opened for senior citizens and ladies, wherever required.
Similarly, special arrangements will be made in other major taxcollecting
centers of the ITD such as Mumbai, Kolkata, Bangalore, Chennai,
Chandigarh, Ahmedabad, Hyderabad, etc. The respective Chief
Commissioners of Income Tax will announce details of arrangements made in these cities.
Taxpayers are advised to file their income tax returns early to avoid
the last minute rush. Taxpayers are also requested to use the e-filing facility of the Income Tax department to get faster and error-free services. It is easy, secure and can be availed of from anywhere anytime. E-filing service is available on the website https://incometaxindiaefiling.gov.in/portal/index.jsp
The Income Tax Rules have been recently amended to include Receipt Number on the TDS certificates as a mandatory field. It is clarified that Receipt Number will not be required for the income tax returns to be filed this year (assessment year 2010-11), but only from next year. Tax deductors are, however, requested to quote Receipt Number of the TDS return for all tax deducted from this financial year.


Source : Income Tax Dept.

Direct Taxes Code in next Parliament Session: Centralized Processing Centres for improving tax payer services in two more places.

Union Finance Minister Shri Pranab Mukherjee has said that the government intends to introduce the Direct Taxes Code in the forthcoming Monsoon Session of the Parliament. He was addressing the Central Direct Tax Advisory Committee.

The Finance Minister said that he had identified nine core areas of concern expressed by various stakeholders. He assured that all these concerns have been taken into consideration while redrafting the Code. He revealed that the code will soon be put in the public domain.

The Finance Minister informed the Committee that two more Centralized Processing Centers (CPC) will be set up during the current year. The first one at Bengaluru has enabled faster processing of tax returns and better records management.

Shri Mukherjee further stated that the Refund Banker Scheme will be extended to more cities this year. The scheme enables speedier refunds directly to the bank accounts of the tax payers. The scheme had been introduced in nine more cities last year. It is now available in 15 cities.

The Finance Minister pointed out that several steps have been taken to improve exchange of tax related information and bilateral tax cooperation with several countries. He said that the government has written to 65 countries to make exchange of information more effective and to remove the secrecy clause.

Shri Mukherjee also informed that twenty low or no tax countries have been identified for negotiating and signing tax information exchange agreement. 


Source : PIB Press Release

Scaling of Mount Everest by Income Tax Officer, Kolkata.

The Income Tax Department is extremely happy and proud to announce that Shri Debasish Biswas, an Income Tax Officer of West Bengal region has scaled the Mount Everest on 17th May, 2010 at 7:45 hours. Shri Biswas was accompanied by two other employees of the Income Tax Department, Kolkata region viz Shri Sourav Sinchan Mondal, Senior Tax Assistant and Shri Bivash Sarkar, Stenographer. Both of them were core members of successful team. This achievement is a matter of great honour for the Income Tax Department as a whole.