Pitching for a non-adversarial tax regime, industry body Assocham today suggested that retrospective amendment be withdrawn in the upcoming Union Budget while calling for e-hearings, quicker IT refunds and raising the tax exemption limits.
Claiming that the atmosphere was "vitiated" due to the retrospective amendment and it drove away global investors by sending them a wrong signal, Assocham Tax Council Chairman Ved Jain said: "We are of the view that retrospective amendment made in the year 2012 should be withdrawn. It will help in improving the environment and instil confidence".
Unveiling the Budget in July last year, Finance Minister Arun Jaitley had assured investors that retrospective amendments to tax laws will be undertaken with extreme caution, and said all fresh cases arising out of the 2012 amendment of I-T Act will be looked into by a high-level CBDT committee.
However, the existing tax disputes, arising out of Retrospective Amendment to the Income-tax Act, 1961, and are pending in Courts, will be allowed to reach their logical conclusions, Jaitley had said.
On the personal income tax slabs, Assocham has suggested raising the I-T exemption limit to Rs 3 lakh from Rs 2.5 lakh at present. It has suggested that income between Rs 3 lakh and Rs 6 lakh be taxed at 10 per cent; between Rs 6 lakh and Rs 12 lakh be taxed at 20 per cent; and above Rs 12 lakh be taxed at 30 per cent respectively.
The Budget for 2014-15 had raised individual income tax limit from Rs 2 lakh to Rs 2.5 lakh for citizens up to 60 years of age and from Rs 2.5 lakh to Rs 3 lakh for persons above 60 years.
Batting for a consistent, fair and non adversarial tax regime, the industry body has suggested that there be a larger body constituted comprising representatives from the industry to give inputs and ideas on the other aspects of Budget, which are not linked to the tax rates.
The chamber has suggested reduction in Corporate Tax and MAT (Minimum Alternate Tax) rates to 25 per cent (inclusive of surcharge, cess, other levies) and 10 per cent respectively.
At present, the corporate tax rate for resident companies, coupled with surcharge of 5 per cent, education cess at 3 per cent, results in effective tax rate of 32.45 per cent. MAT rate at present is 18.5 per cent.
On the housing loan incentive, it has suggested that limit for deduction of interest on housing loans be revised to at least Rs 3 lakh (from existing Rs 2 lakh), whereas the limit
for principal loan repayment be increased from Rs 1 lakh to Rs three lakhs.
The industry body has recommended that exemption limit for leave encashment be raised to Rs 10 lakh, as the current limit of Rs 3 lakh was notified way back in 1998 and needs to be raised substantially with immediate effect.
Assocham has also recommended that surcharge, education cess and higher education cess be abolished, arguing that these levies make tax law complex, increase workload and cause confusion.