Who: Draft report of R V Easwar Committee to simplify Income-tax Act,1961
What: Released by the Union Ministry of Finance
When: 18 January 2016
Union Ministry of Finance on 18 January 2016 released the draft report of Justice R V Easwar (Retd) Committee to simplify the provisions of Income-tax Act, 1961.
The draft recommendations of the 10-member committee contain 27 suggestions for amendments under the Income-tax Act, 1961 and 8 recommendations for reform through administrative instructions.
Highlights of the draft report
Recommendations to facilitate speedier disposal of tax disputes-
• Amendment to Section 255(3) to enhance the monetary limit for Single Member Bench (SMC) cases before the Tribunal to rupees one crore from the present rupees 15 lakhs
• Amendment to Section 254(2) to reduce the time-limit for rectification of orders of the Tribunal from the present four years to 120 days
• Deletion of section 143(1D) – Avoiding undesirable delay in issue of refunds
Recommendations to promote ease of doing business and simplify procedures-
• Tax deduction at source (TDS) rates for individuals and Hindu undivided families (HUFs) to be reduced to 5 percent as against the present 10 percent
• Proposal for certain amendments in rule 30 and 31 in relation to time and mode of payment of TDS and filing of statement of TDS under the provisions of section 200
• A presumptive income scheme for professionals should be launched. The presumptive tax is levied on an estimated income.
• Deferment of Income Computation and Disclosure Standards (ICDS) to make the process of refunds faster
• Exemption to non-residents not having Permanent Account Number (PAN), but who furnish their Tax Identification Number (TIN) in their country of residence from the applicability of TDS at a higher rate under section 206AA
• Amendment to section 234C to provide relief where a new business is started during the financial year
• Grant of timely refund with interest and also providing for payment of higher interest in case of delayed refund
• Release of property attached under section 281B on submission of bank guarantee
The RV Easwar Committee was constituted on 27 October 2015 to study and identify the provisions/phrases in the Income-tax Act, 1961. The committee was also mandated to suggest measures to improve the ease of doing business, reduce litigation and accelerate the resolution of tax disputes.
The constitution of the committee is in tune with the Government’s intention to reform the taxation processes, both direct and indirect, that are long overdue for decades.
While the RV Easwar Committee was focused on the indirect tax regime, the Goods and Services Tax (GST) Constitution Amendment Bill, 2015, which is pending with the Rajya Sabha, is aimed at overhauling the indirect tax structure.