Kamal Ghorui
While some of these expectations are in sync with the government’s stated intent of simplifying and streamlining the taxation regime in India, others depict a wishlist.
By Richa SawhneyThe Union Budget is just round the corner, and it is that time of the year when Indian taxpayers look at the hon’ble Finance Minister with a lot of anticipation and expectation. While their wishlist will always be long, some of the key items at this juncture are:One Nation- One Income tax Return (ITR) Form – There are currently 7 ITR forms, which are applicable to different categories of taxpayers. Multiple forms often confuse taxpayers. They create complexity and increase chances of errors. The taxpayers have to figure out the correct ITR form applicable for them for any particular year, basis their sources of income and other parameters applicable for that year. As the sources of income may differ on a year-on-year basis, ITR form may also vary. The government had in the past considered the option of one uniform ITR form for all taxpayers, to make tax filing simpler and user friendly. It is desirable that the same be re-evaluated, more-so, when after the introduction of the New Income-tax Act (New Act) the ITR forms in any case need revision. This single ITR form could have the option to select the entity type of taxpayer and income sources, post that only relevant pre-filled schedules may be visible to the taxpayer. This will further streamline the return filing experience for taxpayers.Master Circular for New Act – The New Act would become applicable from 1 April 2026. There are numerous circulars and notifications which have been issued in the past six decades in the context of the Income-tax Act, 1961(old Act). It may be worthwhile to issue a master circular listing all the circulars which are applicable as on 1 April 2026, giving reference of the new sections in the New Act, after removing Circulars relating to the sections which have been deleted in the New Act. This Master Circular may be updated and re-issued on a yearly basis. This would help taxpayers in referring to the correct circulars. It will also be in line with the government’s intent to make income- tax law simple and user friendly.Tax Deduction at Source (TDS) Reforms – TDS compliances take a lot of time and there is an urgent need to revamp the TDS framework; and it may be possible to do that in a neutral revenue manner. Studies may be conducted to identify TDS sections where collections are high, others with insignificant contributions could either be deleted or merged. Any shortfall would be factored in the consequential advance tax figures. Also, it is desirable that only 2-3 rates are prescribed, so that it becomes easier for taxpayers to comply. Further, the requirement to issue TDS certificates should be removed. This information is already available in form 26AS and Annual Information Statement (AIS). TDS Ledger mechanism may be considered to avoid litigation on matching income with TDS. These measures put together, will go a long way in reducing compliance burden on taxpayers and mitigating litigation on interpretation issues. Tax as a tool to tackle air pollution in Indian cities – Many Indian cities continue to regularly appear in the world’s most polluted cities list. In the recent past many countries have also issued travel advisories for India highlighting the pollution concerns. Considering the magnitude of the problem, a multi pronged approach is required to address this challenge. Using direct tax law as an enabler by giving a special tax incentive for purchase of Electric Vehicles (EVs) may be considered in the new individual tax regime. While the policy of the government has been to move to lower taxes with lesser deductions and exemptions, an exception may be carved out for this incentive due to health emergency the country faces on account of air pollution. Taxpayers could also be encouraged to earmark some proportion of CSR spend for supporting research in pollution control measures and supporting government approved pollution control schemes/drives in the cities in which they operate. This spend should be specifically permitted to be treated as tax deductible expenditure. While these measures on a stand-alone basis may not resolve the issue, they could help support the overall efforts needed at the government level to tackle the situation.To conclude, while some of these expectations are in sync with the government’s stated intent of simplifying and streamlining the taxation regime in India, others depict a wishlist based on the need being felt by masses in India to tackle the health hazard being felt by all of us. Taxpayers hope that the government considers them favourably in the upcoming budget.(Richa Sawhney is Tax Partner, Grant Thornton Bharat LLP CA Sanket Goel contributed to the article. Views of the author are personal)
