The government today announced some concessions for mutual fund industry and income tax payers, while comitting to low tax regime to promote industrial activity to generate jobs and create more resources to undertake social welfare activities. Announcing the concessions in the Lok Sabha, Finance Minister Arun Jaitley said high tax rate of 20 per cent on the debt mutual fund will apply from July 10, the date of the presentation of the budget, and not from April 1, 2014 as proposed earlier. In this regard, the Minister said he was accepting a suggestion made by Congress leader Jyotiraditya Scindia and some other members as it amounted to leving tax with retrospective effect for about three months.
The Lok Sabha later passed the Finance Bill, 2014 completing the budgetary exercise in the Lower House. In order to provide some relief to the tax payers filing returns late and paying penalty on daily basis, the Minister said that CBDT will be empowered to exercise discretion in this regard. He also expanded the scope of Settlement Commission to include cases where proceedings have already been initiated. The Minister rebuffed his own party MP Nishikant Dubey for saying that "we will not be able to bring back black money from Switzerland in our lifetime."
Jaitley said "we pray for his long life but we will not have to wait for long (to get back black money from abroad)." Justifying his emphasis on having low tax regime and smooth tax system, the Minister said the government wants to revive the investor sentiment "which has been disturbed" and mop up additional resources to fund social welfare activities. He said low tax regime will make India goods competitive and cited China as an example in this regard.
The changes proposed in the Finance Bill, Jaitley said, "will further simplify and smoothen the tax strucutre of the country and help us in raising the revenue because this year we need a higher revenue itself because of meeting the fiscal deficit targets."
On his proposal for relaxing norms for late filing of returns, Jaitley said "for late filing of returns there is a provision which has become onerous as huge penalty (is levied) per day and there are no power of waiver itself. "So if somebody says it's filed after a year than per day the penalty used to become extremely exorbitant. So some discretion is given to the CBDT with regard to that penalty where cases of late filing of returns were involved. The penalty as such will remain."
As regards the proposal on the Settlement Commission, Jaitley said it will take up "cases where proceedings have been inititated for reassessment and proceedings which are pending for fresh assessment in pursuance of an order of a tribunal or a commissioner for setting aside or cancelling the assessment itself."
In order to reduce mounting tax litigation, Jaitley said he proposed to provide for more benches of Advance Ruling to deal with transfer pricing disputes. Seeking to boost the wind energy sector, he announced extension of the accelerated depreciation benefit to the sector as demanded by members. Talking about the concerns expressed by members over tax forgone, Jaitley said it is permitted by law and eventually it benefits consumers and make domestic products price competitive.
"Ours is not high tax government...Consumers want to buy goods not taxes... if you load every product with high taxes, your products will become less competitive," he said, adding that Chiha has learnt the art of low cost productivity.