New income-tax regime wants tweaks to get extra enticing: Income secretary Tarun Bajaj

Income secretary Tarun Bajaj has mentioned that the brand new exemption-free income-tax regime must be tweaked to make it extra enticing. Bajaj, who superannuates this Wednesday, instructed ET’s
Anuradha Shukla &
Deepshikha Sikarwar in an interview that the tax construction additionally must be made extra steady. Edited excerpts:

What’s subsequent on the agenda for the tax construction?
I’m not concerned within the discussions on the price range now, however there’s undoubtedly a have to additional convey reforms in each direct and oblique taxes. We have now to rationalise charges underneath the Items and Companies Tax (GST), too…scale back the variety of slabs and relook at exemptions. Then there are some points like on-line gaming, and the establishing of tribunals. Such points will preserve arising, in order that they should be resolved. Sooner or later, we must also take a look at getting gasoline and ATF (aviation turbine gas) into GST. And, later, when states see an uptick in revenues and the business sees the benefit, there might be stress to maneuver to a really pure GST construction.

On the direct taxes facet, (there are) about two, or three points. One is to repair the capital positive factors on all fronts. Second is the non-public revenue tax and the third is to rewrite the code to simplify it. If you happen to do this, litigation will scale back. We’re reaching a stage the place we have to give full stability to the tax buildings on each side. We have achieved a little bit of a journey on this, however I feel some bits are nonetheless disregarded.

How do you see convergence when it comes to the 2 private tax regimes — exemption-free and the common one?

We have to rewrite it to make the brand new regime higher than the previous one. Beneath the brand new regime, the exemption restrict is Rs 2.5 lakh whereas within the previous scheme you do not have to pay any taxes as much as Rs 7.5 lakh. Most individuals fall inside this revenue bracket and they also don’t have any incentive to come back to the brand new tax regime.

Regardless of a number of efforts to simplify the tax construction, business and companies nonetheless complain about it being difficult. What’s the means ahead?
We have now achieved fairly a bit; some complaints could be there, some real, some not. We are actually attempting to supply one income-tax return kind rather than six. This itself is a means towards simplification. We have now launched a faceless system in direct tax and customs. We have now introduced in lots of reforms however there are nonetheless lots of issues that should be achieved. The boards (CBDT and CBIC) are often issuing directions and normal working procedures. We have now tweaked the compounding (of tax offences) to make it more practical. Then there’s a change in stance on criminalisation of offences. We should always let folks pay taxes, pay penalties, and transfer ahead, although in some circumstances it’s wanted as a deterrent.

There was speak about a re-look on the capital positive factors regime. What’s your view?
I’m not positive of what might come on this price range however there’s a have to simplify it (capital positive factors).

The economic system is shifting in the direction of fast digitisation and new merchandise comparable to cryptos are rising. What’s the tax system doing to gear as much as meet these challenges?
We’re transferring fairly quick in the direction of know-how. There are another areas the place we have to work just a little extra, however we’re… utilizing Synthetic Intelligence (AI) and algorithms very extensively and successfully. We detected gold and drug smuggling utilizing these. In lots of current seizures, we had been in a position to establish precisely these folks by simply analysing the patterns through AI.

What about new sorts of companies comparable to on-line gaming?

We’re engaged on that. On on-line gaming, there are folks sitting throughout the border. How do I catch them? However the cash goes from right here. There’s a digital border the place we are able to cease. We have now groups engaged on all these fronts. We could also be just a little behind the people who find themselves doing this stuff, however we’ll quickly get there. It’s one thing that even superior international locations are going through.

Elevated compliance is extensively seen as one of many causes for the tax buoyancy…

If you happen to see the GDP development in 2021 and 2022, in comparison with that the tax buoyancy is actually good. This can be a results of improved compliance. We have now been utilizing information extensively. We have now caught a lot of faux bill circumstances and even taken deterrent motion like registering FIRs in opposition to the accused. When folks realise that they can’t get away with tax evasion they may pay. We have now acquired about 4.5 lakh up to date returns and a few corporates have additionally filed up to date returns. I used to be not anticipating up to date company returns to come back. There are greater than a dozen circumstances through which the tax paid was greater than Rs 1 crore.

India is seeking to signal extra commerce agreements. Is there a case for tightening, as an example, the rule of origin underneath Customs to forestall misuse?
India is a peculiar nation. It’s a barely larger customs obligation nation and gives a big market. So, we should be very, very cautious when negotiating these agreements. Within the subsequent 5-10 years, now we have to grow to be aggressive. The duties have to come back down.