The government’s focus in Budget 2021-22 is to make tax compliance easy and simple so as to boost voluntary compliance even while cracking down on tax evaders, said Central Board of Direct Taxes Chairperson P.C. Mody. Excerpts:
You have assumed a significantly higher tax buoyancy from corporate income tax. Could you give us a sense of the target-setting exercise?
The current year’s projections are very realistic, so are the projections for next year. But the pandemic made this an exceptional year, so a revision was required and was made. Based on that, next year’s projection has been made. One has also to factor in the ease of compliance that has been brought about, the certainty of the tax culture. You are getting better tax administration and processes, with information you have entered in your own portal to enable you to file your returns properly and conveniently.
All of this together should create an environment that the tax liability gets discharged by each individual, corporate and entity, in a correct and proper manner.
The synergy in exchange of information between different arms (of the government) is part of this exercise.
On the one hand, you are trying to create an atmosphere for voluntary compliance, and on the other, you are not sparing the persons trying to game the system. Together, this should bring in the buoyancy.
Could the decision to limit reopening of tax assessments to 3 years from 6 pose a challenge to the department?
No. It has to be seen from two perspectives. First, trying to give some certainty to the taxpayer so he should not have the lurking fear of when his tax matters may get resolved. Yes, it does bring a challenge of completing things at our end much earlier, but with the help of technology, that is possible.
I have kept the option that if the evasion is of ₹50 lakh and above, I can review it up to 10 years, but again with a filter — with the approval of the highest person in the field and proper application of mind. Whenever I have the occasion to revisit a taxpayer’s case, I give him the reasons upfront, take his reply and in the event of a non-satisfactory reply, only then will I go for this. It’s clearly defined.
How will the dispute resolution committees for small taxpayers work? How much do such disputes account for in the overall pending disputes?
It will be a dispersed set up, as you can’t expect taxpayers to be moving to and fro. But it would be again a faceless mechanism. Faceless is the new normal. Out of my current pendency, a substantial portion of the tax disputes are in this category.
Really speaking, they didn’t have an alternate mechanism except for the appellate process. The whole idea is to make the process of compliance for the taxpayer as easy and simple as possible so as to promote voluntary compliance.
How many cases have been resolved through the larger tax dispute resolution scheme, Vivad Se Vishwas?
It’s been a great success. I have so far received almost 1.18 lakh forms, resolving 1.32 lakh disputes with a quantum of nearly ₹95,000 crore. This entire month is still left. [Those] who have not yet made a decision, can still go for this. This is almost one-fourth of the total 5 lakh such cases.
Citizens aged 75 years or older don’t have to file tax returns in some cases. How will this work?
A senior citizen normally has pension income, and out of that if he has been able to save something, he will put it in a financial instrument like a fixed deposit. Both attract TDS. So once TDS has been done, there is no need for a paper return. The caveat is, it has to be from the same bank. If there are deposits in multiple banks, then you will have to do the calculation because banks don’t have that infrastructure.
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