Budget 2016-17: Focus Ease of Doing Business

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Finance Minister, Arun Jaitley presented the Budget for year 2016-2017 on 29-Feb-2016. Though there will be a lot of discussions on the budget and its impact on economy, there are many important aspects of the budget that misses the public eye. ProsperoTree.com brings the little but important features of Budget that will be directly or indirectly helpful to general public at large and fits the overall theme of ‘Good Governance’ and ‘Ease of Doing Business’. Here are certain pointers on the same. 

  • No Face to Face Assessment (e-assessment): Based on a pilot project that was run in 2015-16, tax payers in 7 mega cities will not have to visit the Income-tax offices for face to face assessment during the scrutiny proceedings. The choice for face to face meetings will be that of the assesse. Usually this is one of the biggest irritants for small businessmen. 
  • Resolution of Tax Issues for Tax Payers via E-Sahayog: Income-tax Department (ITD) will fully expand the initiative of ‘e-Sahyog’ with a view to reduce compliance cost, especially for small taxpayers. The objective of the ‘e-Sahyog’ pilot project is to provide an online mechanism to resolve mismatches in Income-tax returns without requiring taxpayers to attend the Income-tax office. 
  • Establishing Accountability: In case of delay of more than 90 days in giving effect to an Appellate order, the Government will pay interest at the rate of 9% per annum instead of normal rate of 6% per annum. The officer who delays it will be accountable to this loss to the government. This will help improve the accountability to a great level. 
  • Faster and Hassle Free Resolution of Dispute Backlog: A taxpayer whose appeal is pending before the Commissioner of Income tax as of Budget Day can settle his case by paying the disputed tax and interest up to the date of assessment. However, the taxpayer will not be charged any penalty if the disputed tax is up to Rs. 10 lakhs. In cases with disputed tax exceeding Rs. 10 lakh, the taxpayer can clear off the dispute immediately by paying 25% of the imposable penalty. This will help government to clear large number of pending cases in very short period. 
  • Capital Gains vs Business Income while Dealing in Listed Shares: The determination whether the gains from sale of listed shares should be looked as Capital Gains or Business Income has led to a lot of uncertainty and litigation in the past. Even after the Central Board of Direct Taxes (CBDT) summarized the principles for the determination of the same vide two separate circulars in 1989 and 2007, disputes still continue to exist on the application of these principles. This is mainly because the taxpayers find it difficult to prove the intention of acquiring shares as investments or for trading. In order to reduce the uncertainty and litigation, the Government of India has instructed vide circular dated 29-Feb-2016 that irrespective of holding period the decision whether to offer his income as Capital Gains or Business Income is dependent upon the choice of tax payer itself. However, the stand once taken by the assesse in a particular Assessment Year, shall remain applicable in subsequent Assessment Years and cannot be changed later on. 
  • Rationalizing of TDS Rate: The government has decided to rationalize the rate of TDS by decreasing the same for various categories. This will help improve the cash flow position of many small tax payers who get their funds blocked due to current TDS provision. 
  • Easier Norms for Retail Trade: The government will provide a Model Shops and Establishments Bill which can be adopted by the states government on voluntary basis. This bill will be made in a simplistic manner and would have rules that are more practical suiting as per today’s standards of business. For example the shops will be given the choice to remain open on all seven days of the week on voluntary basis without sacrificing the interest of the workers in terms of mandatory weekly holiday and number of working hours per day. This will increase business opportunities for small businessmen at par with malls and increase employment opportunity for the people in this sector. 

To sum it up, here is something that we found in the budget documents that aptly summarizes it: 

“The Government is giving unparalleled emphasis to good governance with special focus on 
process reforms, IT-enabled Government processes, etc. The whole idea is to remove the
irritants for the public in their interface with Government agencies.”
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