06 March 2016

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Budget 2016 Tax Litigation, Corruption to Increase Taxpayers Pain

Budget 2016 Tax Litigation, Corruption to Increase Taxpayers Pain

"The current range of penalty that the tax department could impose (i.e. from 100 per cent to 300 per cent of the incremental tax liability) has now been shifted to a two-point scale, that is, 50 per cent for under-reporting of income and 200 per cent for misreporting of income,"

As per current provisions where penalty can be levied only if the taxpayer has concealed his income or furnished inaccurate particulars of income relying on a Supreme Court ruling." 

As per new provisions of Budget 2016 if company pays less tax and income tax officer will decide the action of the company was malafide or bonafide
After this income tax officer will decide whether to levy a fine of 50% or 200%

Here income tax officer gets discretionary power if company has paid less tax purposefully then that company will bribe the income tax officer to fine the company 50% penalty only and for this company will pay him the bribe.

Thus increase in corruption.

Now second case if company is honest and has paid less tax because of some error in this case if company is honest it will not pay the bribe if income tax officer charges 200% penalty, the company will move to court reason not to pay 200% penalty.

Thus increase in litigation, court cases.

Finance Ministry, Government of India needs to keep the income tax rules simple and easy to understand.

For any type of mistake, not paying tax rule should clearly say that pay the original full amount plus 100% fine and if repeated offender compulsory jail term of 30 to 100 years with no right to parole.

Government should just keep 100% fine whatever may be the nature of mistake purposefully or intentionally does not matter

Made a mistake pay the fine no excuses
Government can give relief to small tax payers like no fines up to Rs.50 Lakh mistake if company or individual accepts the mistake found by the tax officer and gives in writing that he or she will not repeat that mistake again and in future if he or she does so purposefully again then he will be liable to pay the fine on all the past mistakes.

Tax rules need to simple and straightforward which will trust the tax payer and will made the tax payer beggar if he cheats the government of India that is people of the India.

Reality views by sm –

Sunday, March 6, 2016

Tags – Income Tax Budget 2016 Litigation Corruption Increase