I-T noose tightens on offenders in 2015;simpler laws in offing

New Delhi, Dec 24: After a year marked with frequent run-ins with foreign investors and also domestic taxpayers, the tax department has set itself a target for 2016 to simplify the voluminous Income Tax laws and follow a non-adversarial but effective mechanism of tax collection.

While the government would seek to maximise its tax revenues with a simpler set of laws, it does not want to resort to asking big companies for extra advance tax or stopping refunds to meet the revenue targets.

While baby steps have begun to reduce the litigations, most of the tax issues facing foreign investors were put to rest in 2015, which also saw the ambitious Goods and Services Tax (GST) bill remaining in limbo due to political slugfest.

Efforts were also made on the BJP's poll promise of cracking down heavily on black money, but the initial response was no more than lukewarm when compared to the astonishing numbers that have been doing the rounds about the undeclared wealth stashed by Indians within and outside the country.

Overhang of some legacy issues, particularly the retrospective taxation facing big foreign players like Vodafone and Cairn Energy, continued although attempts were made to resolve these long-pending issues.

Government began conciliatory proceedings in the Rs 20,000 crore tax dispute with Vodafone while Cairn took the government to international court of justice to get an arbitration going in the Rs 10,247 crore tax notice.

Both the cases appear set for a long-haul. To its credit, the tax department tried to simplify some of the processes like giving immediate refund for amounts below Rs 50,000 and deciding to withdraw low-value appeals.

But with the economy picking up slower than anticipated, there was a threat of tax collection targets being missed, which the government tried to make up by raising excise duty on petrol and diesel. A levy of a 0.5 per cent cess on taxable services was introduced to fund the Prime Minister's ambitious Swachh Bharat campaign was introduced.

"We are absolutely confident of meeting the target of indirect tax collection and we are hopeful of reaching as close to the target in direct taxes as possible. But we would not like to achieve target by mandatorily asking some big companies to pay extra advance tax in the current year or by stopping refunds," Revenue Secretary Hasmukh Adhia told PTI.

Summing up the year, Adhia said the thrust of the reform of tax department is to have non-adversarial, non-intrusive, and still an effective, system of tax collection. "All these measures would give more certainty and satisfaction to the taxpayers and would lead to less litigations.

Our efforts in 2016 will be to simplify the I-T law and address other issues relating to taxability of Real Estate Investment Trusts (REITs) and Alternative Investment Funds (AIFs)," Adhia said.

PTI