Finance Ministry invites suggestions for changes in direct, indirect taxes from trade, industry bodies

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Categories: GST Recent News

The Finance Ministry has invited suggestions for changes in direct and indirect taxes in the Union Budget, from trade and industry bodies. Suggestions can be submitted on or before November 15, 2021.

The Union Budget for Fiscal Year 2022-23 is expected to be presented on February 1. Direct taxes include Personal Income Tax, Corporate tax, Equalization levy and Securities Transaction Tax, while indirect taxes refer to Central Excise Duty and Custom Duty.

“You may like to send your suggestions for changes in the duty stricture, rates and broadening of tax base on both direct and indirect taxes, giving economic justification for the same,” a Revenue Department’s letter addressed to Trade and Industries Association said.

Talking about direct taxes, the department said: “As can be seen that the Government policy with reference to direct taxes in the medium term is to phase out tax incentives, deduction and exemptions, while simultaneously rationalizing the rates of tax.”

Accordingly, it said that it would also be desirable that while forwarding the suggestions/ recommendations, positive externalities arising out of the said recommendations and their quantifications are also indicated. “You may also like to give suggestions for reducing compliances, for providing tax certainty and reducing litigation,” the letter said.

The 2020-21 budget noted that the Income-tax Act provided more than one hundred exemptions and deductions of different nature. “I have removed around 70 of them in the new simplified regime. We will review and rationalise the remaining exemptions and deductions in the coming years with a view to further simplifying the tax system and lowering the tax rate,” Finance Minister Nirmala Sitharaman had said.

Similarly, for indirect taxes, the 2020-21 budget withdrew 80 exemptions related to customs duty, while the 2021-22 budget proposed to review more than 400 old exemptions through extensive consultations from October 1, 2021.

The department clarified that GST related requests were not examined as part of the Annual Budget. Hence, recommendations and suggestions should be related to Central Excise and Custom Duty. GST related issues have been discussed and decided by the GST Council since 2017.

The department has asked trade and industry bodies to supplement and justify their suggestions and views by relevant statistical information about production, prices, revenue implication of the changes and any other supporting information.

The department made a specific mention about the inverted duty structure (higher duty on input and lower duty on output). It said the request for correction of an inverted duty structure for a commodity should necessarily be supported by value addition at each stage of manufacturing. “It would not be feasible to examine suggestions that are either not clearly explained or which are not supported by adequate justification/statistics,” the department said.

Source from: https://www.thehindubusinessline.com/economy/finance-ministry-invites-suggestions-for-changes-in-direct-indirect-taxes/article37299316.ece

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