KPMG hopes for rationalisation of taxes, enhanced use of technology in compliance

Professional services provider KPMG said on Tuesday the Union Budget 2020 may see a reduction in dividend distribution tax or bring about a change in the manner of dividend taxation in order to make it a shareholder-level tax.

Besides, it may attempt a rationalisation of personal tax slabs and provide for a reduction in the rates for individuals.

One can expect the minimum alternate tax (MAT) regime to be revisited in terms of the manner in which MAT is computed. This will do away with complications involved around it.

KPMG said the tax rate applicable to foreign companies and limited liability partnerships could be revisited in light of the recent tax cuts for domestic companies.

"The government may also devise new ways of resolving disputes, particularly in case of transfer pricing and foreign companies," it said in a statement.

One can expect the government to adopt systematic risk assessment measures ensuring that a strategy is laid down in place to capitalise on the value of the overseas information received.

KPMG said one can expect rationalisation of the tax deduction at source (TDS) provisions that will facilitate credit to be rightfully granted to the taxpayer and ensure faster processing of refunds.

The government could explore a new dispute resolution scheme to free up tax dues that are locked up in long-pending litigation.

Additional measures may be introduced to enhance the use of technology in tax compliance -- in terms of filing returns, reporting transactions and communications by the department.

"The Budget may witness re-drafting of the law in case of certain complex provisions, like provisions on capital gains taxation. This will bring simplicity in the language and comprehensibility of the law," said KPMG.

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