The ideal income tax act we all want:-
1.The preamble must be amended to say “Income tax is income tax is income tax which is tax on income.” Today Income tax has several taxes under it’s ambit which are not related to income, famous examples are TDS, STT etc. infamous examples from Chidambaram era are Banking Cash Transaction Tax and Fringe Benefit Tax. Both were rolled back after stiff resistance.
2.Salary deduction must be inflation linked and not to be left at will and whimsy of politicians.
3.Entire House Property section needs to be deleted. That can be easily subsumed under “Income from Other Sources”. Subletting of House Property is already charged under this section. It is not government’s business to lend heling hand to builder community. Allow total interest payment as deduction at the time of sale of Property with indexation. This separate head of income leads to unnecessary complication.
4.Do away with all additional deductions from Income from Business/Profession section. Deduction should not exceed 100% of cash spent. If Government want to incentivize give PLI scheme. Do not burden Income Tax and in turn department of Revenue with your Economic agenda.
5.Do away with requirement of Tax audit for those business who’s Sales and Purchases reconcile more than 90% with GST return. If business is honestly disclosing it’s income and expenses there is no need for separate audit. Especially after E-invoicing rule applicable.
6.Do away STT immediately. STT was introduced saying there will be no LTCG. Government has already walked back on it’s promise. It is now time to roll back the tax. Government now has data on all the sale and purchases done by the PAN. Pre-filled forms now comes with auto-filled LTCG. The STT makes no sense anymore.
7.Do away with Concessional rate for STCG/LTCG. It is not only GST which is in dire need of rate rationalization. Income Tax too need this.
8.Do away with entire Chapter VI-A. This entire chapter was inserted by an amendment. It is not government’s job let alone of department of revenue to channelize investments of the assesses. Let people invest in which ever instrument paying higher return.
9.Do away with all the MAT/AMT taxes which depends on P&L drawn not in compliance with Income Tax but with accounting standards. If implemented strictly thew point 4 will take care most of it any way.
10.Do away with dividing individual assesses in class based on Age like Senior Citizen, super senior citizen or based on gender like male and female. All individual assess must have same slab structure based on income, not based on gender or age. If you deem age important factor give indexation.
11.Make a form for advance tax and make advance tax paying assesses to upload the form before paying tax. Carry out scrutiny electronically to check assesses are paying requisite amount of tax.
12.Do away with different slab of income. Keep one basic exemption limit common for every assesses. Keep Basic exemption limit high like 25 Lakhs. Keep one tax slab for super Rich like 10 CR.
13.Do away with Section 10 of exempt income. This will bring more income to tax net which will help to exceed 25 Lakhs slab limit.
14.Do away with different slab of tax. Keep maximum 2 tax slab not higher than 1/6th or 16.66%
15.Even though few things are in new tax regime we need to expedite the process.
16.Give honour to Super Rich tax payers to have a Road, Bridge, Railway Station, institute named after them. Give them 5 attempts at naming something in the locality.
