The government has tried to remove redundancies in the Income Tax Act-1961, under the Bill to be tabled next week. The language has been made simpler, to the extent feasible, and the presentation has been made user-friendly, Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal told Priyansh Verma in an interview. On the implementation of Pillar 1 and Pillar 2 rules aimed at streamlining of taxation of digital economy and deter tax avoidance by MNCs, Agarwal said that ultimately, India should get the fair share of tax revenue, which the country is not getting at the moment. “The relevant international organisations will deliberate on that and then see what happens. Some consensus may emerge out of the ongoing discussions,” he noted.
There was an expectation of a concessional corporate tax rate of 15% or 18% for new manufacturing units being reintroduced in the Budget…
As on date, the tax rate stands at 22%, which is an optimal rate. There is no reason to bring it down to 15%. We have to balance the tax requirements. On one hand, there was a criticism that corporate tax was down, and now there’s an expectation to introduce a 15% rate. We’ve to take a balanced view.
What’s your view on adoption of OECD Pillar 1 and Pillar 2 rules? The US recently withdrew from these global tax deals…
Let things evolve. Some thoughts have been introduced to the system. The relevant international organizations will deliberate on that and then see what happens. Some consensus may emerge out of the ongoing discussions. It’s premature to comment right now. Ultimately, we should get a fair share of tax revenue, which we are not getting at the moment.
Corporate tax collections in FY25 was cut by Rs 40,000 crore in revised estimate. For FY26, the projected growth is 10.4%; and for taxes on income, the forecast is 14.4%. Why are the estimates so conservative?
We are being realistic, not conservative. The growth in corporates’ revenues has been taken into account. For income tax, the estimates reflect the impact of revenue foregone of Rs 1 lakh crore, due to revamp of slabs and rise in rebate.
Direct tax refunds have risen substantially. As of January 12, they were up 43% on year at Rs 3.74 lakh crore. How do you see it going forward?
We’re not keeping any backlog of refunds. That’s a shift in our approach. We shouldn’t hold the refund, just to meet our tax collection targets. Wherever the refund is due, it is being given.
If the backlog is not there, then going forward, the amount of refunds will also go down. Additionally, the TDS rates have been optimized, so whatever refunds have been generated due to higher TDS, those will also reduce.
What changes can we expect in the new income tax bill?
We have tried to remove redundancies in the act. We have made the language simpler, to the extent feasible. The presentation in the Act has been made user friendly. Even some tables have been made in the bill to explain provisions, which were earlier written in sentences, and led to different interpretations.
The obsolete provisions have been removed, and as a result the document (bill) has become leaner. I feel, the volume of the Act should now nearly reduce by 50%.
Disputes occur because the taxpayers or the tax authorities are interpreting a particular provision in different manners. If the language is simple and clear, then disputes won’t happen, or minimized if not nil. That is the thought behind simplifying the provisions.
The Economic Survey 2024-25 said that stability in Advance Pricing Agreements (APAs) is needed to attract FDIs…
We’re trying to speed up the APA process. Even today, the time that we take to conclude APAs is much less compared to major economies. We are making efforts to increase the strength of the APA team, use technology, and make the documentation process easier, to achieve those results.
The Budget has introduced provisions for mandatory reporting of transactions pertaining to virtual digital assets (VDAs) or crypto. Do you feel the right amount of tax is not being captured by authorities now?
The announcement has more to do with an international commitment we have made. There is a ‘Crypto Asset Reporting Framework’ signed by over 50 countries that requires such data to be reported. From 2027, a proper framework will be rolled out for reporting of transactions linked to virtual assets.
Under the proposed framework, any designated reporting entity engaged in crypto-asset transactions must submit transaction details to the relevant income-tax authority within a specified timeframe and in the prescribed format. The framework may also result in such income coming under the tax net, which could be substantial.
Source from: https://www.financialexpress.com/money/size-of-income-tax-act-to-reduce-by-half-in-new-bill-cbdt-chief-3735654/
