FM's Initiative to Simplify Tax Compliance Through Budget 2017
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What Did the FM do to Simplify Tax Compliance Through Budget 2017?

budget 2017 simplifies tax compliance

For those who are blaming the high taxes and the complex procedures to follow the tax laws of the land, the Finance Minister has taken several steps towards simplification of the tax compliance procedures through the Union Budget 2017-18.

In his speech on February 1, 2017, Finance Minister Arun Jaitley noted, “When too many people evade taxes, the burden of their share falls on those who are honest and compliant.” He later noted that the thrust of his tax proposals is simplification of tax administration.

He said a simpler approach to tax and low compliance burden would not just expand the tax base, but also change the colour of money. Let us see what are the measures he proposed to simplify tax compliance thereby enhancing tax revenues.

  1. New  Income Tax Return FormThe Finance Minister has proposed to introduce a new income tax return form for person earning non-business income of Rs 5 lakh, with an aim to improve compliance through simplification of procedure for those who bear smaller taxes.
  2. Income Tax Scrutiny and LitigationAnother move welcoming first-time tax filers is an exemption from income tax scrutiny and litigation during the first year.
  3.  Form – 15G or 15 H for Insurance AgentsIn a major relief to life insurance agents, whose income was below the threshold, but were forced to e-file returns and claim Tax Deduction at Source (TDS) refund for the 5% that was deducted from their commission, the Union Budget 2017 proposed to exempt the agents from TDS deduction provided they offer a self-declaration form – 15G or 15 H – ascertaining that their income is below the threshold limit.
  4. Advance Tax Instalments for ProfessionalsThe Union Budget ringed cheer not just for salaried and low-income earners, but also for professionals generating receipts of less than Rs 50 lakh. For them the budget proposals suggested that advance tax can be paid in one instalment instead of four instalments. This instalment of advance tax can be on or before March 15 every financial year.
  5. Increase Tax Slab LimitsIn order to reduce the compliance burden of maintenance of books of account, the Budget provisions also proposed to increase the limits of income from Rs 1.20 lakh to Rs 2.5 lakh and total sales or turn over or gross receipts from Rs 10 lakh to Rs 25 lakh for individuals and Hindu undivided families (HUFs) carrying on business or profession starting assessment year 2018-19.
  6. TDS for Rental IncomeWhen it comes to rental income, house owner was required to obtain TAN to deduct TDS. The Budget proposes, “In order to reduce the compliance burden, it is further proposed that the deductor shall not be required to obtain tax deduction account number (TAN) as per section 203A of the Act. It is also proposed that the deductor shall be liable to deduct tax only once in a previous year.”
  7. Processing of Tax ReturnProcessing of return within the prescribed time and enable withholding of refund in certain cases
  8. Notices for Tax ScrutinyWhen notices for scrutiny were issued to tax filers under Section 143 (1D), the returns weren’t processed thus delaying the refunds. In order to address the grievance of delay in issuance of refund in cases routinely selected for scrutiny, with effect from assessment year 2017-18 it is suggested to mandate processing of returns under section 143(1). If a tax official is concerned about the recovery of revenue he may withhold the refund up to the date on which the assessment is made, after recording reasons in writing and seeking approval from the Principal Commissioner or Commissioner.
  9. PAN Quotation MandatoryTo ensure that there are no tax credit mismatches with respect to transactions where taxes are collected at source, the Budget proposes to make it mandatory to quote the PAN of the collectee in all correspondence, bills and vouchers exchanged between them. Non-residents who does not have a permanent establishment in India too have been exempted from the provision to quote the PAN to claim a lower tax deduction rate, effective April 1, 2017.

The Finance Minister has proposed these measures with an aim to make India a better tax-compliant nation.


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Chetan Chandak
Chetan Chandak
Chetan Chandak is the Head of Tax Research at H&R Block India. He has been with the company for the past five years. He has handled individual taxation, taxation for HNIs and senior management personnel and has represented clients on several occasions in front of various tax authorities. His major area of interest is tax litigation, tax research, handling dual tax impact for ex-pat clients.

1 Comment

  1. Tarun batra says:

    Good reviews

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