Significant thrust has been placed
on “non-adversarial tax administration” by proposing to constitute a Tax
Administration Reform Commission to review the application of tax
policies and tax laws. This would facilitate our tax systems to
adopt best global practices, which is a reflection of an emerging
economy. The proposal to provide for MRP based valuation in respect of
branded medicaments of non-allopathy systems of medicine, will bring
more clarity in law and reduce disputes. However, non-rationalization of the complex and restrictive credit provisions is a major disappointment.
The re-introduction of tax deduction at source on sale of immovable property, where the consideration exceeds Rs.50 lakhs, is certainly the need of the hour to curb tax evasion by way of undervaluing or non-reporting of immovable property transactions. Introduction of withholding tax @ 20% of profits distributed by unlisted companies to shareholders through buyback of shares would prevent significant revenue leakage. Likewise, levy of higher rate of tax on royalty and fee for technical services to non-resident to prevent categorizing distribution of profits by a subsidiary to a foreign parent company as royalty is expected to plug the loophole and prevent escapement of income.
The re-introduction of tax deduction at source on sale of immovable property, where the consideration exceeds Rs.50 lakhs, is certainly the need of the hour to curb tax evasion by way of undervaluing or non-reporting of immovable property transactions. Introduction of withholding tax @ 20% of profits distributed by unlisted companies to shareholders through buyback of shares would prevent significant revenue leakage. Likewise, levy of higher rate of tax on royalty and fee for technical services to non-resident to prevent categorizing distribution of profits by a subsidiary to a foreign parent company as royalty is expected to plug the loophole and prevent escapement of income.
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