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Better collections better than raising taxes for funds: Survey
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SME Times News Bureau | 27 Jan, 2021
A fund-starved government will be better off looking at increased
collections fuelled by an economic recovery and improved technology
driven enforcement rather than through the introduction of new taxes, a
KPMG survey showed on Wednesday.
According to the pre-budget
survey 2021-22, only 2 per cent of the respondents feel that raising
taxes would be the solution to mobilise additional revenue for the
government that sees an increase in its expenditure due to the pandemic.
A
majority (20 per cent) held that the Government's revenue needs can be
met through increased collections fuelled by an economic recovery as
well as improved technology driven enforcement (49 per cent).
The
KPMG survey conducted in January 2021 has tried to capture the
expectations of all important stakeholders on various tax aspects of the
budget. In all, 250 respondents across sectors participated in the
survey.
Despite the expectation that government may not raise
taxes, the survey has brought out that a smaller number of respondents
(29 per cent) expect that a new Covid-19 cess may be imposed in the
Budget.
When it came to some of the measures the government could
adopt to provide relief to the salaried class, some respondents (74 per
cent) felt that an enhancement in the standard deduction on salary
income from the existing Rs 50,000 should be considered.
As to
what the government could do more to help resolve disputes, a whopping
(77 per cent) of respondents felt that a mediation scheme should be
introduced in the Budget to enable negotiated settlements of tax
disputes.
AS many as 38 per cent respondents felt that the
Advanced Pricing Agreement (APA) programme had been effective in
pre-empting/resolving key transfer pricing controversies. About 40 per
cent respondents felt that the introduction of the General
Anti-Avoidance Rules (GAAR) and the implementation of the Multilateral
Instrument (MLI) could lead to increase in tax disputes.
Given
the financial impact of the pandemic, a majority of respondents (47 per
cent) expect an increase in the deduction with respect to provisions
made towards Non-Performing Assets (NPA) by banks and NBFCs. This would
provide much needed relief to the banks and NBFCs, who are bracing for
increased delinquencies, on account of the pandemic.
A toral of
43 per cent respondents felt that a specific carve out for unlisted
shares and securities from tax collected at source (TCS) was also
warranted.
Asked if respondents felt that the Goods and Services
Tax (GST) regime was getting simplified over the last three years, the
response was divided. While 45.97 per cent believed that it was
simplified, 41.71 believed otherwise. This could be due to multiple
reasons such as various notifications, circulars being issued on a
regular basis, number of increased compliances for multiple
registrations, stringent provisions for credits availment which, in
turn, leads to additional costs and time investments in the business.
Nearly
two-thirds respondents (62 per cent) were comfortable with the digital
compliance system introduced for GST. A large percentage of respondents
(64 per cent) believe that CBIC should introduce customs assisted
assessment for Micro, Small and Medium Enterprises (MSMEs)
Lastly,
in line with the need to provide a level playing field to provide a
level playing fields for Indian companies to access overseas capital
markets and facilitate a better valuation for equity shares, 70 per cent
respondents said that the government should announce provisions to
facilitate a regime for direct overseas listing of Indian companies.
Commenting
on the findings of the survey, Sunil Badala, Partner and Head,
Financial Services- Tax, KPMG in India, said: "Our Pre-Budget Survey
indicates that relief for the salaried class by way of an enhancement in
the standard deduction on salary income from existing limit of Rs
50,000 is highly awaited. Corporates are also hopeful that dispute
resolution will continue to be a priority for the Government; and that
negotiated settlements of tax disputes will be enabled. Overall, we
notice that the respondents do not expect introduction of any new taxes
including Covid-19 cess."
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Import |
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84.65 |
Euro
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75.65 |
Japanese
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56.85 |
As on 13 Aug, 2022 |
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