Union Finance Minister Smt Nirmala Sitharaman recently chaired a review meeting with the Central Board of Direct Taxes (CBDT). The meeting included discussions on various subjects such as increasing the taxpayer base, expediting disposal of pending disciplinary proceeding cases and applications for exemptions under the Income Tax Act, 1961. Let’s discuss about the key takeaways from the meeting and their implications on India’s tax landscape.
Expanding the Taxpayer Base and Recent Initiatives
During the meeting, Smt Sitharaman was briefed on the impact of recent initiatives introduced to expand the taxpayer base, like addition of new data sources in the Statement of Financial Transactions (SFT), including dividend and interest, securities, mutual funds and GSTIN information. These changes have led to a significant increase in reported information, i.e. an addition of information for about 3 crore persons.
Growth in TDS Codes and Reported Transactions
The introduction of new TDS (Tax Deducted at Source) codes, which have almost doubled from 36 to 65 in the past eight years, has led to a considerable increase in total reported transactions. In FY 2021-22, the number of reported transactions reached 144 crore, compared to 70 crore in FY 2015-16. This growth in reported transactions has resulted in a rise in the number of unique deductees, almost doubling from 4.8 crore in FY 2015-16 to 9.2 crore in FY 2021-22.
Personal Income Tax (PIT) to GDP Ratio Growth
Smt Sitharaman was also informed about the steady increase in the Personal Income Tax (PIT) to GDP ratio, which has grown from 2.11 in FY 2014-15 to 2.94 in FY 2021-22.
Addressing Pending Disciplinary Proceeding Cases
The Finance Minister reviewed pending disciplinary proceeding cases against employees and officers, emphasizing the need to minimize administrative and procedural delays. She directed the CBDT to take prompt action in finalizing such proceedings.
Disposal of Applications for Exemptions
Smt Sitharaman stressed the importance of timely and appropriate actions on all applications filed by taxpayers, requesting a reasonable timeframe for disposal of such applications. She also encouraged the CBDT to expand and strengthen its efforts to increase taxpayers’ awareness regarding the provisions of direct tax laws and compliance requirements.
In conclusion, the recent review meeting with CBDT, chaired by Union Finance Minister Smt Nirmala Sitharaman, focused on the growth of the taxpayer base, addressing pending disciplinary proceeding cases and improving the disposal of applications for exemptions. The introduction of new data sources (TDS codes) and the growth of the PIT to GDP ratio demonstrate the progress in expanding the taxpayer base. Furthermore, the Finance Minister has emphasized the importance of timely actions and increased awareness efforts to ensure better compliance with direct tax laws.