Budget 2021- Way of rewarding the Tax Compliant

A small number percentage/ number of tax compliant contribute substantially to both the income tax as well as GST in India. There is an urgent need to see that they are supported by specific measures and not only by empty words. Their tribe needs to multiply. Needs some hard decisions and soft attitude towards them. However, for the errant evader the need to quickly punish is needed. Time compromises the people as well as the documents.

Some measures could include:

1.      Categorise those filing regular returns or based on increased net contribution as green. Specific benefits be accorded to them and checking to be only 1% for them. No stopping by e-way bill squad, audit only once in 3 years limited 3 days each time….

2.      Bring the petroleum products into the GST, available for set off. Around 2-3% ITC would increase for the tax compliant and force those outside to join to get that advantage. There may however be an adverse impact in the short term as the present rates on the 5 products are relatively high.

3.      Bring the commercial real estate into GST for registration purposes.

4.      Focus on the tax evader and not on those registered who are filing regular returns.

5.      Do not: attach bank accounts, write to suppliers, collect tax which is based on interpretation or suppliers default with threats of closure of business or arrest.

6.      Grant refunds for those where files are lost and not found for years on provisional basis.

7.      Have an automated help desk- ( 90% will answer) and also manned by professionals to answer all procedural queries escalated to them(10%).

8.      E-way bill related seizures only for absence of documents and not some errors in figures/ dates. Automatic extensions where there are some logistic issues known like climate, inaccessibility, strike…