Suggestions for Budget 2018 - Income Tax
JANUARY 22, 2018
By T C Gupta, Advocate
1. HUF - Specified:
The concept of HUF-Specified was removed by the Finance Minister Shri P. Chidambaram in the budget 2006, from 1.4.2007. Earlier, the HUS Specified, where any member of the HUF had taxable income, the income of the HUF was charged at higher rate than none specified HUF, which is charged to tax at the rates prescribed for Individual. The then FM removed the HUF Specified slab from the statute, clandestinely. A Hindu is practically getting double relief of basic exemption limit and other deductions including deduction u/s 80C on its income. Therefore, for augmentation of revenue, to revive the HUF Specified status is a good idea.
2. Appeal Fee for CIT(A) and ITAT:
Appeal fee prescribed under section 249 (1) for filing appeal before the CIT (A) is Rs. 250/- where the assessed income is Rs. One lac or less ; Rs. 500/- where the assessed income is more than Rs. One lac but not more than Ts. Two lac and Rs. 1000/- where the assessed income is more than Rs. two lac. These rates were prescribed in the year 1998. Now the basic limit of taxable income is Rs. 250000/- for Individual, therefore, the rates of 1998 have become outdated and absurd.
The rates of appeal fee require to be revised based on the additional tax/demand raised by the AO and not the assessed income.
The same is the position of fee for filing appeal before the ITAT u/s 253(6). Further, the maximum fee of Rs. Ten thousand is too much and against the express concept of cheap and early (sahaj and sugam nayay) justice. The maximum fee should be Rs. Two thousand.
3. Time limit for the CIT (A) to decide appeal:
As per section 250 (6A), the CIT(A), where it is possible, may hear and decide the appeal within a period of one year ...... . But none of the CITs(A) is deciding appeals within one year, although, in most of the cases it was possible for them to decide the appeal within one year. This provision requires to be made mandatory. The AOs are deciding the assessment orders and other orders within the specified period. For one year a grace period of one year can be given. This proposed amendment will augment the revenue, reduce corruption at the level of the CIT(A) and relieve the taxpayers of the burden of infructuous demand pending for long times. Normally, the CITs(A) decide the appeal on pick and choose basis and not on the chronological order.
3. Impounding of account books during survey u/s 133A:
The power to impound account books during survey u/s 133A (3)(ia) was given to the ITO/AO vide Finance Act, 2002. As per Proviso to clause (ia) The ITO/AO will not impound any books of accounts except after recording his reasons for so doing.
Practically, after 2002, in every case of survey, the AO impounds the books of accounts during survey. Normally, he records reasons that “the books of accounts are impounded for verification.”
This is no valid reason for impounding the books but there is no check on the AO. This amendment has become a tool for the AO to pressurise and harass the person surveyed and for extracting surrender and bribery. Therefore, suitable amendment is required in this provision. The AO could impound the books of accounts only if he gives a certificate of specific incriminating material in the books of accounts to be impounded.
4. 80P deduction to Credit Cooperative Societies:
Deduction u/s 80P should be allowed only to the primary agriculture societies. All other societies, including multi state credit cooperative societies are doing banking and all businesses like cooperative banks. Except, registration with the RBI, a cooperative bank and a coop credit and other societies have no major differences. The so called concept of mutuality is only a sham. None of the societies distribute profits to the public, who are members of the society.
5. Tax on clubs:
The concept of mutuality is only a sham. Tax should be imposed on the excesses and incomes of every club. Clubs are luxuries of wealthy people.
6. Tax on trust and institutions:
All trusts and institutions are amassing wealth in the name of charity. Rarely, anyone does charity. All the Babas, Ram Rahim, Ram Pal, Ravi Shanker, Asha Ram, Virender Dev Dixit, Nermal Baba, Radhe Ma, Radha Swamy and all others are amassing wealth and running parallel governments. Practically none of them is doing any service to the society particularly for the poor of the country. All their collection and savings should be taxed as business income. Even most of the educational and medical institutions are also doing successful good businesses and a major part of income goes in the pocket of the persons running the institutions.
