Govt may eliminate taxman's discretion, lower stamp duty
New Delhi, Dec 2: Tightening the noose further around black economy, the government may abolish discretionary powers of tax officers in deciding liabilities for evasion, said NITI Aayog Vice-Chairman Arvind Panagariya.
He also hinted that stamp duty for real estate dealings may be eased with a possible rise in on-the-book property deals in the wake of the ongoing crackdown on unaccounted wealth.
"We have to also go back and begin to think much more seriously about a whole set of tax reforms, which would both bring in simplification and precision in the definition so that you reduce, and hopefully even eliminate, discretion of tax officers on this matter," Panagariya told private TV channel India Today in an interview.
Panagariya, a former chief economist of the Asian Development Bank, was responding to questions on possible follow-up measures to the November 8 announcement of ban on 500 and 1,000-rupee banknotes. "A lot of evasion of taxes happens when there's too much discretion on the part of officers.
So, we need to simplify," he remarked. "Simplification", he explained, "would mean doing away with (tax) exemptions. In addition, (we need to) also define situations much more precisely so that it leaves no room for discretion for the tax officers to decide whether under such and such situations you are liable to tax, you are not liable to tax."
The government, Panagariya said, is beefing up enforcement against tax cheats in the real estate sector. At the same time, concerns over the high rates of the stamp duty should also be taken care of, he suggested.
"On real estate, we need to begin to enforce it better. But we need to address the issue of stamp duty. Is it too high?" he asked.
"If the transactions are going to come in white, probably the amount for which the transaction is taking place would rise." Asked whether he foresaw a drop in stamp duty, Panagariya answered "that's something we ought to have on the table".
The NITI Ayog chief stoutly defended Prime Minister Narendra Modi's demonetisation of the country's biggest notes, which has come under heavy attack from a host of economists, including former prime minister Manmohan Singh.
"Stamping out corruption on a large scale has not been tried in a developing economy in the past," Panagariya argued.
"This is the first time, where in a developing economy, a Prime Minister says that look we got to do a clean-up job here and systematically proceeds to do that." He described Modi's currency ban as an "essential step".
"This is the first time an economy has tried to do the clean-up job. What the step has been taken is an essential step. It is not the last step."