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4. OTHER SUGGESTIONS :
We are making a few more
suggestions, which are general in nature but may bring far reaching effect in tax compliance
and curbing tax evasion .
a)
Mandatory filing of Profit & Loss Account and
Balance Sheet by all taxpayers :
Presently only those taxpayers whose income is from business
are required to furnish with their Income Tax return
the Profit
& Loss Account and Balance Sheet as provided in Explanation
under section 139(9) of the Income Tax
Act.
In this context
we suggest that with a view to bring transparency
and in the interest of proper verification , all
taxpayers should be required to file Income & Expenditure
Account/ Profit & Loss Account and Balance Sheet/Statement of
Affairs reflecting the details of all the assets and liabilities
at the year end. Though the CBDT has issued new return Forms
Saral 2 and Saral 3 ,seeking details of
various expenditure ( like education, vehicles and other
expenditure in excess of Rs. 50,000) by the taxpayer and details
of credit cards, bank accounts, investment in immovable
property and movable property in excess of Rs. 1 lakh but
despite these being lengthy, the real purpose is not served.
These were opposed by taxpayers and the CBDT had made
relaxation. Therefore it is better to provide for furnishing of
the Profit & Loss Account and Balance Sheet with the Income Tax
return.
b) Revision of Time Limits :
We welcome the general thrust of the
Government for speedy finalization of assessments, and disposal
of appeals, rectification petition etc. In this context we would
further suggest to review the time limit for furnishing
the belated returns u/s 139(4) and time limit for completion of
assessments prescribed u/s 153. We feel that there is scope for
fine tuning these time limits.
c) Interest
on demand and refunds- the difference needs to be bridged
With effect from
1st June,2002 the interest charged by the
department is 15 per cent whereas the interest
allowed
on Refunds is only 8 per cent. Then again,
the interest on refund is subjected to tax in the hands of the
assessee,
which means the taxpayer gets almost 5.6 per cent
post tax interest. The difference in the rate of interest
charged and
interest allowed should be packed maximum at 2 per
cent. That means if the department allows 8
per cent it
should not charge more than 10 per cent in the
interest of equity and fair play.
d) Use of
term Financial Year for all purposes
:
With a view to
bring simplicity we would suggest to do away with the terms
assessment year, previous year etc.
and use the
single term i.e. financial year for all purposes, now that with
effect from assessment year 1989-90, all
tax payers are required to mandatorily file their returns on
the basis of financial year. So the need of using the term
assessment year or previous year no longer remains. Such
a step will help in removing the unnecessary confusion
among the
general taxpayers.
e)
Revision of Monetary Limits prescribed for various
purposes :
We would suggest
a re-look at the monetary limits prescribed under various
sections of the Income Tax Act and bring the same to realistic
level keeping in view the inflation. Some of the monetary limits
which deserves reconsideration, include :
Section 40A(3) :
Payments otherwise than account payee cheques :
With effect from assessment year 1996-97
it has been provided that in case of payment of expenditure in cash, a
sum of 20
per cent of such expenditure shall not be allowed. It has been seen in
case of transporters that they insist
for cash payment as they require money for
fuel, tyre and other exigencies and it is not possible to detain the driver
of the truck to open a bank account and accept payment by cheque. Moreover rule
6DD(j) has also been omitted.
We would suggest that a proviso should be
made to section 40A(3) to provide that sub-section(3) does not apply
in
respect of payment to transport to take care of such problems.Alternatively
rule 6DD(j) should be restored.
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