GOVERNMENT OF INDIA
Ministry of Finance
DEPARTMENT OF REVENUE
UNSTARRED QUESTION NO. 471
ANSWERED ON TUESDAY, THE APRIL 28, 2015 / 8 VAISAKHA 1937 (SAKA)
Road Map of New Tax Code
471. SHRI RAJEEV CHANDRASEKHAR:
Will the Minister of FINANCE be pleased to state;
(a) the steps being taken by Government to increase the tax base in India in view of the fact that lessthan 3 per cent of the population paying income tax;
(b) the roadmap for a new tax code and the details of steps being taken to reform tax administration in India?
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(a): The Government has taken several steps to increase the income-tax base in India. Themechanisms for collection and verification of financial information have been strengthened.Theseinclude collection of specified transactional data from various agencies in form of AnnualInformation Return (AIR) and collection of information on high-value expenditure from commercialestablishments by Central Information Branch (CIB). The Income Tax Department has alsoimplemented a project called Non-filer Monitoring System (NMS) which analyses all databases of in-houseand third-party information to identify persons who have failed to file return of income thoughpotentially having tax liabilities. During the financial year 2014-15, 11,82,713 returns were filed by the non-filers identified by NMS in 2013 and 2014. Self-assessment tax of Rs.1,870 Crore andAdvance Tax of Rs.1,980 Crore have also been collected from the non-filers so identified. In 2015,NMS has identified around 44.07 lakh non-filers with potential tax liabilities who have not filed returns for AY 2013-14. As on 22ndMarch 2015, 5,72,137 identified persons have already e-filed IT return for AY 2013-14.
Besides, various legislative measures have been taken to increase the tax base. These includeexpansion of scope of tax deducted at source (TDS) and tax collected at source (TCS) by bringingmore and more taxable transactions within the ambit of TDS/TCS. The Finance Bill 2015 proposes tolevy TDS on interest in excess of Rs.10,000 earned on fixed deposits and recurring deposits acrossbranches of bank. Purchase of bullion exceeding Rs.2.00 lakhs and jewellery exceeding Rs.5.00lakhs has been subjected to TCS @ 1 % of sale consideration through the Finance Act, 2012. TDS at the rate of 1% on sale of immovable property (other than agricultural land) of Rs.50.00 lakh or morewas imposed through the Finance Act, 2013. Moreover, the provision of Minimum Alternate Tax(MAT) has been extended to firms and Association of Persons and Commodities Transaction Tax hasbeen levied on sale of commodity derivative (other than agricultural commodities).
(b): With regard Direct Tax Code (DTC), the Finance Minister in para 129 of his Budget speech,2015-16 has stated, "Enactment of a Direct Tax Code (DTC) has been under discussion for quitesome time. Most of the provisions of the DTC have already been included in the income-tax Act.
Among very few aspects of the DTC which were left out, we have addressed some of the issues in thepresent Budget. Further, the jurisprudence under the Income-tax Act is well evolved. Considering allthese aspects, there is no great merit in going ahead with the Direct Tax Code as it exists today."
As regards the steps being taken to reform tax administration, the policy of the Government aslaid down by the Finance Minister in his Budget speech, 2015-16 is to provide a stable taxationpolicy and non-adversarial tax administration. In this direction several steps have already been takenincluding simplification and rationalization of tax laws, restructuring of the Income Tax Departmentto align it with the current functional needs, reduction of interface with taxpayers through e-delivery of services, reduction of litigation through prescription of higher monetary thresholds for filing appeal, creation of alternate dispute redressal mechanisms, time-bound redressal of grievances andexpeditious issue of refunds.