New Income Tax bill gives no new search powers, eases compliance: Baijayant Panda

Time of India

4 hours ago

The new income-tax bill does not grant any new powers to authorities on search and seizure, and significantly reduces ambiguities to make the common taxpayer's life easier, said
Baijayant Panda
, chairperson of the
parliamentary select committee
that revised the draft legislation.
"We had very extensive interactions with the ministry.... I must say I found them open minded. A vast majority of the suggestions that the committee endorsed, they also agreed with," Panda told ET in an interview.
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The panel submitted a 4,575-page report in Lok Sabha last Monday along with a draft bill with around 285 changes to the bill introduced by the government. It has suggested reinstating a provision on deduction in respect of inter-corporate dividends among substantive changes, while retaining the provisions related to search and seizures, on which the panel received multiple representations.
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"There were multiple representations, all based on misunderstanding and misinformation," Panda said, adding that search and seizure provisions apply only to 0.01% of taxpayers. He said there were court judgements, internal circulars, and these could not be carried out subjectively, whimsically, or to target somebody.
"Several criteria must be met for a search and seizure to be authorised and that's already well established in law," he said.
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The existing Act, he said, was written in 1961 when there were no computers. "But even then, the principle was clear that on a duly authorised search and seizure, if somebody is non-cooperative, like if they have a safe which they refuse to open, then the authorities are entitled to break a lock and access... The same principle has been extended to digital information," he said.
"No new powers have been granted. It is exactly the same thing, just simplified," Panda said.
He said the committee's mandate was not to change policy, not to change tax rates, not to change applicability of certain kinds of taxes or income, but to ensure that the underlying tax code is simple.
"This is the first big bang major reform," he said. "Our committee had a very, very hard schedule. We were meeting on two full days every week for the last five months. And we had more than 125 hours of witness hearings and large numbers of written submissions from all over the country."
Panda said he is hopeful about the bill getting passed in the monsoon session of parliament.
On concerns about privacy, he said, "I think some of these concerns have been misrepresented in some sections..."
On the philosophy behind substantive changes suggested, he said, the panel's mandate was clear that the bill should be easy to understand and easy to comply with, so that there are lesser disputes.
"We must give credit to the ministry for reducing the word count by 50%, but the ultimate objective is not brevity, the ultimate objective is clarity," he said, adding that the panel in a handful of cases actually suggested going back to the original wording. "It's slightly longer, but it is clearer. For example, some of the charitable trust...represented to us that... there is some ambiguity in the shortened wording, so we preferred to go back," he added.
On revisiting certain definitions, he said in some cases, the definitions differed across ministries. "One of the suggestions is that MSME is now a well-understood concept. There is a separate act for it and the same guidelines can be used instead of having different guidelines for what is MSME," he said.
Food for thought
Panda said the panel received several suggestions on policy changes. "If you go through all the pages, these over 4,000 pages are not all the Act and report. It contains a lot of annexures with a lot of suggestions. They have given me a lot of food for thought. I am sure they have given food for thought to all the members of the committee and also to the government and others."