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IT is that time of the year when wise men of TRU go in their customary annual huddle within the confines of the North Block and men/women of every hue put up their thinking hats about what should budget contain. This mortal being is no exception. Though the budget exercise is gradually losing its sheen as the changes are carried out throughout the year and TRU which used to be 'last quarter busy only' section has now got work throughout the year, depriving the TOTRUs of their much envied beginning of the year cinema breaks to Connaught Circus. The media hype accompanying the budget exercise and later its analysis, and the ups and downs of the stock market, which is capable of reading a lot, even if FM sneezes (cotton handkerchiefs may get an exemption, throat soothers may become cheap, pollution control equipment list may have more inclusions etc.) makes it an exercise which is next only to elections. So, it is a good time to join the bandwagon, though many suggestions are the outstanding of the previous year and will continue to be outstanding even in the next year because they are not found to be outstanding by those who listen and decide.

Direct taxes : Since last year my suggestion to abolish or raise the wealth tax limit was partly met and the limit raised and has been promised to be raised with the notification of DTC, therefore, I will not touch upon it.

1. After simplification of the tax structure, to my mind, next assault has to be on the complicated tax compliance issues. All business and professions can be given the option of paying tax up to receipts of 25 lakhs by treating 50% of the receipts as taxable income on a notional basis just by maintaining the account of receipts only. This will better tax recovery and will reduce unnecessary maintenance of accounts by small business and professionals.

2. The accounting for share market transactions and recording of capital gains on the same is a complicated process involving FIFO method, looking at the holding period of every single transaction. May be by enhancing STT the same can be done away all together, as the Government will not lose revenue or at least can jeck up STT to that level and investors will be saved of such cumbersome recording of transactions for which even a software has not been developed till date. In the event any Income Tax officer thinks otherwise, then let some of the worthy officers of the department maintain these accounts on a trial basis for two different individuals for about two hundred transactions and I shall cede that there is no logic in my suggestion.

3. I am sure see that a number of bigwigs amongst politicians, industrialists, bureaucrats are likely to be cornered over disclosures of names featuring in Swiss bank and other tax heavens list. Government should pragmatically come out with one last time “ Amnesty or Compounding Scheme ”, as this is the only way to get the money back to where it belongs. In any case, talking about ethical issues is fine, (since some newspapers are opposing the move), but if the country can alleviate all its poverty, remove all hunger related deaths from its map through influx of such money, then all the intellectual and ethical arguments get dwarfed. Otherwise with all their might, all the agencies of India will never be able to get this money back to Indian coffers. Again, are we still not continuing to have such amnesty schemes every year for various taxes like service tax, house tax and even VAT, then what is wrong in making it known to all defaulters by legislative process that it is one last time and allow it for income-tax purpose also?

4. Again, my all time favourite on the income-tax side is the rebate for small family norm, which I am always surprised as to why is not being accepted. This can be in the form of tax rebate for individuals for any member of the family adhering to small family norm to check the population growth. It can be Rs. 10,000 for two children and Rs.15, 000 for one child family. It has been real long since this government or any other government in the past paid a lip service to family planning. So, why not reward those who voluntarily think of the national cause. The FM and his team will also show that they are sincere towards the burning issues of the nation. Initially, the benefit can be extended to any couple who goes in for voluntary sterilization etc. during child bearing age or who are certified medically to have crossed child bearing age, with one or two children in the family.

5. Further, suggestion will be to hike the rate of corporate tax and MAT or by levy of special purpose cess on tobacco products etc. solely with the objective of creating a corpus for political funding of elections. A beginning has to be made somewhere considering that India is again slipping down in the list of corrupt nations prepared by Transparency International. Why not make a beginning this year? How the corpus is going to be apportioned can be left to the collective wisdom of the legislators to decide.

1. With the change in the nomenclature of The standard of Weights and Measures Act, 1976 to The Legal Metrology Act, 2009, a change in the relevant central excise notifications shall be necessary.

2. The Pan Masala Packing Machines (Capacity Determination and Collection of duty) Rules, 2008 are facing a challenge of constitutional validity in various courts and apex court at present, some of the misgivings of the assesses are not misplaced because of the way certain provisions have been worded or are being interpreted by the field officers. The following may need a re-look as far as wording is concerned as they are leading to impression in the field that these rules give them power even to levy duty and penalty much beyond what is mandated as the maximum duty or penalty under Section 3A of the Central Excise Act, 1944 or under section 11A as the maximum mandatory penalty.

Rule 9- Indicate time frame (say of three months) with in which a person is a defaulter for the purpose of proviso 2 and therefore, can discharge duty with interest but with no penalty, and when he becomes defaulter for the purposes of proviso 7 and has to therefore incur penal duty and penal penalty which is more than 100 percent as prescribed under the Act. Also the concept of penal duty as enshrined in proviso 7 is unknown to any tax legislation and cannot be termed as excise duty. The same is also without mandate under the Act.

Rule8- Proviso 1 to Rule 8 requires amendment to bring it in line with Chewing Tobacco Machine Rules, as the same logic mutatis-mutandis applies. The following substitution therefore is required:

Provisio 1 should read as: “ Provided that where a manufacturer uses an operating machine to produce pouches of different retail sale prices during a month, he shall be liable to pay the duty applicable to the pouch bearing the highest retail sale price for the whole month.”

Customs:- 1. A relook is required at the baggage free allowance limits as the same have not been revised for a number of years.

2. Codify export baggage rules by at least bringing out the absolute export restrictions, as outbound passenger is not supposed to look into all the FEMA Rules, export control orders and restrictions under EXIM policy etc.

Service-Tax: Bring in the reverse charge liability for advertisement and sponsorship services, as the same is most evaded service and putting the service seeker under liability to deposit shall considerably swell the coffers of the revenue and reduce administrative costs.

General: 1. To avoid pitfalls of vagaries of highly unpredictable tax litigation in India, it is suggested that Advance Pre-Deposit Tax accounts for Litigation should be introduced, wherein any tax payer can deposit money as a lien for any uncertain tax liability of income-tax, customs, excise and service tax and can be freed from levy of interest or penalty liability to the extent of credit balance in the deposit account, in the event of same being imposed by any litigation. And in case of fruit of litigation goes in favour of assessee, DOR can pay nominal interest of 3% to 4% on credit balance. Government can use savings generated through this account for developing infra or any other cause close to its heart.

2. With the Settlement Commission now allowed taking cognizance of clandestine removal and smuggling cases, power of Chief Commissioners in this regard to grant amnesty against prosecution, which in any case is rarely being used, can be taken away. Further, the settlement commission can be allowed to be approached even after 1st adjudication and/or at the stage when the Department decides to proceed with the prosecution.

3. SAFEMA can be abolished by including custom offences in the Money Laundering Act, which in any case mostly has fraud cases involving misdecleration, undervaluation coverable under section 420 of I.P.C. and hence under Money Laundering. Similarly, offences of NDPS are being covered under the Money Laundering Act. Attachment provisions under NDPS Act can be done away with. Do not need too many nooses around the neck of the man to be hanged.

4. National Tax Tribunal be notified- Let us feel that Government is not only interested in creating provisions in the statute book but also likes to notify them. Let the present FM cut this ribbon, we will all clap.

5. Qualification for becoming Member (Technical) of CESTAT be brought at par With ITAT i.e. an Additional Commissioner with three years standing to be eligible to catch young member (technical) for CESTAT. ‘Catch them young' applies with equal force to CESTAT also.

6. Advance Ruling Authority - Jurisdiction may be extended to cover all Indians or at least all service tax matters. Why not give the foreign treatment to even Indian nationals also?

7. Creation of a Separate Directorate for IPR (Border) Enforcement and Adjudication under CBEC. Let this be a focused area for us to prove to the world that we really care on enforcement aspect of IPR, even enforcement of foreign trademarks, copyrights etc. can be entrusted to this agency even if violations occur in the interior. It will definitely keep Customs and Excise Department busy in the post G.S.T regime.

8. Create more benches of CESTAT, at least equal in number to ITAT as a precursor and preparation for G.S.T., even otherwise with service tax litigation going up; there is a strong case for creating more benches of CESTAT. Not only is the number of cases swelling, but courtrooms also have lawyers overflowing to the corridors.

9. The requirement which has developed of approaching CESTAT for seeking extension of stay every six months can be done away with as it has not served any purpose excepting increasing the burden of already over worked Benches of the CESTAT.

10. 1st stage appeal to Commissioner (Appeals), which in any case in more than 95 % cases is heard along with the main appeal can be legally allowed to be heard without any requirement of pre –deposit of duty and interest. The measure will be trade friendly and in any case is not serving any useful purpose.

11. Similarly for the 1st stage appeal to the Tribunal (normally against the order of Commissioner), an option can be given to the appellant to opt for pre-deposit of 50% of duty voluntarily in cases where there is no mandatory penalty and 75% of the duty, where there is a mandatory penalty to enable hearing of final appeal without any further pre-deposit. This will reduce burden of hearing stay applications on the CESTAT and get some deposit for the DOR.

1. Create tax ombudsman as a body having representation of Samman holding tax payers. Let the Tribunals have some members selected from this section of society.

2. Allow Samman holder Central Excise assesses paying revenue of more than one crore, 1% as tax collection incentive as they reduce cost of collection to the department.

3. Income-tax returns to collect and collate information from taxpaying asessees regarding where would they like 10% tax payers discretionary spend to go i.e. whether in education, science research, poverty alleviation, defense, electoral reforms etc. and Government to give weight age to such view in future budgeting.