In the year April-November, Indias net direct tax collection increased 24% to Rs 8.77 lakh crore . With this, the full-year Budget Estimates (BE) for FY2023 has attracted 61.79% of direct tax collection .
In the year April-November, India's net direct tax collection increased 24% to Rs 8.77 lakh crore.With this, the full-year Budget Estimates (BE) for FY2023 has attracted 61.79% of direct tax collection.Tax collection is a measure of economic activity in any country.Compared to the year-ago period, 66.92% more refunds were issued up to November 30, 2022, according to the ministry.According to Deloitte India, the Government's plugging of tax leakages is one of the factors that led to this increase.To plug such tax holes and broaden the tax base, the government has introduced various withholding tax programs.However, as the industry is faced with various challenges, clarity on the implementation of these provisions is needed, according to Rohinton Sidhwa, Partner at Deloitte India.Here are the hopes for the Union Budget 2023 on the tax front, which will be unveiled on February 1. According to Deloitte India, they have the following goals to address those issues.Provide details on which organization is liable to deduct tax under Section 194-O of the Act if the selling of goodsservice is made via intermediaries and there are several e-commerce operators involved.It should be clarified that the provisions of Section 194-O will not apply when an e-commerce provider facilitates the selling of goods or services by a resident seller to a customer outside India, in order to support exports from India.In Section 206C(1H), a similar exclusion for exports is offered to collect taxes at the source. To reduce the number of quarterly transactions required for reporting and issuing TDS certificates, consider allowing the deductor to display a consolidated monthly entry per deductee.For the purposes of Section 194-O of the Act, refunds, interruptions, and incidental charges (such as delivery or transport charges, packing charges, gift wrap charges, and a convenience fee) are not allowed to be included in the gross amount.Verify that pre-paid goods and services are not included in the definition of goods and services.Description of expectations #2: Clarifications regarding the application and application of Section 194R of the Act The Supreme Court (SC) has held that the compensation received must be in some other form than money, as outlined in Section 28(iv) of the Act. It should be clarified that any write-off of debt is not a benefit or perquisite arising out of business or service, and therefore, not subject to TDS under Section 194R.With the practical difficulties posed by the industry, a minimum of six months may be required, and the provision's effective date can be postponed to that extent.It should also be noted that for a period of six months beginning with Section 194R, no punitive action will be taken by way of TDS recovery, interest, penalty, or disallowance of expenditure.In this case, the government should devise a roadmap for the implementation of SEP and EQL provisions in light of the progress of the OECD plans on Pillars 1 and 2 and to improve the ease of doing business in India. The terms such as conducting in discussions and making contact with people should be defined and guidance should be provided using appropriate examples and measurable barometers for describing the meaning.To ensure consistency and smooth implementation of the SEP rules, early rules for attribution of income should be issued.EQL should not include transactions with group companies or the definition of users for SEP arrangements.Clarification must be provided to eliminate the overlap between SEP and EL provisions to ensure that the income derived from EL, which is exempt, should not be attributed to SEP. Non-resident taxpayers who obtained income from the dividend, interest, royalties, and fees for technical services were exempt from the requirement to do so under Section For simplicity of compliance, it may be considered to extend the said waiver to non-residents taxpayers who have been subject to withholding tax on income (and have no permanent residence in India).Non-residents who make an income tax refund or government interest on money borrowed or debt incurred other than in foreign currency that has been withheld or payable in accordance with the Act may, for example, earn interest on income tax refunds or interest paid by an Indian company.They should be able to file a tax return in India without any restriction.Expectation 5: Extension of the sunset clause in Section 194LC and Section 194LD The Finance Act, 2012 (for Section 194LC) and the Finance Act, 2013 (for Section 194LD) have provided a promising and attractive avenue for businesses to raise funds, helping India to maintain the momentum of economic growth over the years.