Simplify these procedures for individual income tax payers in Interim Budget 2024: CII

It is recommended that the TDS provisions of section 194Q and TCS provisions of section 206C(1H) be made applicable only to payees or payers who are not registered with GST. This will then align with the Government’s intention of widening and deepening the tax net. Alternatively, instead of TDS/TCS, the purchasers/sellers may be required to file Annual Information Returns. Also, in view of divergence between definition of ‘goods’ under Sale of Goods Act and GST law, ‘goods’ may be defined precisely with exclusion for items like shares, securities, foreign currency and actionable claims

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Government may consider laying down a roadmap for reducing the disparity in TDS rates by having only two or three categories of payments and a small “negative list” of payments which will not be liable to TDS.

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The suggested categories of payments could be as follows:Salary: TDS rate at Normal slab ratesLotteries and horse race winnings: TDS rate at 30%All other payments: TDS rate at 2%

The suggested “negative list” of payments may illustratively include the following:1. Payments to senior citizens2. Exempt income payments (e.g., payments to agriculturists, North-Eastern citizens)3. Purchases or payments to GST registered entities on which GST is paid.4. Payments to registered charities 5. Existing payees covered by section 196 (Government, RBI, Statutory Corporations and Mutual Funds).

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This will considerably ease the compliance burden on the taxpayers, simplify the domestic TDS regime and avoid litigation on characterisation disputes.

This will considerably ease the compliance burden on the taxpayers, simplify the domestic TDS regime and avoid litigation on characterisation disputes.

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To reduce compliance burden, it is recommended that the requirement to issue TDS / TCS certificate can be done away with exceptions for (A) Salary TDS certificates in Form 16, (B) TDS certificates to non-residents and (C) Higher TDS/TCS where PAN is not available.

Tax Deduction at Source @ 1% under section 194O – Applicability on Farmers/ FPOs It is suggested that digital platforms operated for the benefit of farmers / FPOs should be excluded from the purview of section 194O.

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CII greatly appreciates the focused efforts made by the Government towards expeditious refunds to taxpayers through faster processing of returns under section 143(1). In keeping with this focus, it is suggested that the internal systemic issue of mismatch between Form 26AS and ITBA should be expeditiously resolved and TDS credit as appearing in Form 26AS should not be denied on the ground of mismatch with ITBA.

Simplified procedure for TDS on purchase of immovable property or renting of immovable property from non-residents
For ease of procedural compliance in dealing with non-resident sellers/landlords, the withholding tax obligations may be streamlined to introduce a single challan cum return form (akin to Form 26QB and Form 26QC) wherein the resident individual will not be required to obtain separate TAN and comply with withholding tax obligations. Alternatively, the scope of Form 26QB and Form 26QC may be expanded to cover the sale consideration / rental income paid to Non-Residents also.

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It is recommended that a suitable amendment is brought to the Income Tax Rules, 1962 to clarify the criteria for perquisite taxation of Electric Vehicles provided to employees by employers.

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Rate structure At present, there is no consistency in tax rates or holding period for different types of instruments falling within same asset class. Even the indexation benefit differs in different situations.

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It is recommended that a carve out should be made in section 68 to exclude genuine borrowings. Alternatively, power may be given to CBDT to notify ‘white list’ of bonafide cases such as (illustrative):
• Borrowings from banks, NBFCs and financial institutions
• Borrowing made by banks, NBFCs and financial institutions themselves
• Deposits, advances from customers, EMD, Security Deposit etc. accepted in ordinary course of business from customers or vendors.

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It is suggested that the time limit for filing revised returns should be extended at least till end of assessment year to enable taxpayers to claim/modify foreign tax credit in line with extended time limit available for furnishing Form 67 to claim such credit.

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