Saturday, July 5, 2014


The much anticipated budget would be the centre of a debate in a week’s time. Albeit late in the day, ruminating over certain policy issues is still worth the while and hence is presented in this post.

Auto Industry: The increasing desire of the urbanites to own vehicles is a boost to this sector but a bane to economists who have to fret over the increasing crude prices and spiralling inflation. A fine balance needs to be struck to ensure that the growth in this sector is not dented but at the same time the inflationary causes are rooted out. The way out be to promote the manufacture of automobiles which would use solar energy and use crude only as a supplement to the shortfall in energy needs of the vehicle. This would ensure that India could set a new standard in this sector and also promote exports to nations in the Austro African belt besides South American and South European nations. The need to start on this as a medium term venture needs a policy boost by determining an Indian standard ahead of the Euro standards. The replacement of crude by gas would also be an alternative supplement. The first phase should ensure that all mass transport vehicles are mandated to comply with these requirements followed by a ten year phase out period for crude based vehicles on the road.

Energy: A policy statement by which any building which houses ten or more units to mandatorily install solar panels is to be considered as a regulation. This would mean that energy needs of these units would partially be met by the solar panels and the demonstrative effect would lead to more such existing units adopting it as an alternative thereby reducing  the dependence on conventional power. The need to provide budgetary policy framework for installation of biogas plants and electricity generation plants from wet waste in every village or one for a radius of 100 kms would eradicate garbage menace and also provide supplementary energy.

Water: The need to use the heritage status accorded to Rani ka Vav to provide for such wells in the top 100 drought prone districts would ensure that water needs are met even in the worst situation. The need to target water harvesting even on public highways, flyovers, Government buildings and any building which holds 1 lakh sq feet of built up area would ensure that in years to come Indians need not fear rain deficits for basic needs. Sanitation should also be of principal focus and necessary provision to ensure sanitation is provided a 100% target for a period of 5 years should underline the priority this sector is being given.

Education: The need to spread the base of education is acutely felt. The Government institutions have fallen in standards. Infrastructure is poor and teachers’ payments are delayed by State Governments leading to it being no more a sought after profession. The policy in education is largely syllabus oriented with changes in power centres. However, the focus needs to be re-establish the pre-eminence of teachers. As a first step, the Centre should offer to share 50% of the education cess collected from a particular State, if the State has in the immediate preceding year paid out the salaries of teachers on time. Secondly, the need to shift focus to second and third tier towns for establishment of fresh institutions with IIT, IIM or Deemed University status is to be considered. This would reduce the need for the students of these realms to move to metros for their higher education needs. Each district should have at least ten schools being modernized in a single year. This would ensure that education is restored its pristine glory all round the country. As a pre cursor to these steps it would be necessary to earmark 5% of the budgetary support to this sector which holds the key to the success of the nation.

FDI  : The hype of foreign direct investment needs to be viewed with some concern. One must bear in mind money does not flow without imposing obligations to cater to the needs of the investor. The large potential of the funds within the country remains untapped. The disinvestment policy needs to be replaced with a policy of raising fresh capital from domestic markets. This would tap the potential small investors and remove the need for the Government to provide such support. Sectors such as steel, petroleum etc could be thrown up for public issue wherein a restriction of 0.1% of the total shareholding is placed on a person/entity or group to be allotted the shares. This would eliminate corporate lobbies from acquiring these shares in anticipation of takeover. The need to preserve the fundamental principle that natural resources including economic resources should not be placed in the hands of a few should be the fulcrum of any policymaking.

Defence: The need to refocus on the security of the nation cannot be overemphasized. The motivation for recruitment needs to be rejuvenated. Import should be of technology and not products as for as feasible. The licence to manufacture in India should be made a precondition for purchase of the product to ensure that we are able to launch ourselves with a springboard and not be armtwisted by economies which run on defence procurements of other nations.

Sales Tax: A conscious decision to eliminate Central Sales tax would be the first step to GST. The Centre needs to show its willingness to part with its share to prod the States to conform for a uniform Sales tax regime. The VAT so collected should remain the revenue of the States but would be proclaimed centrally to ensure uniformity in pricing across the country. This would be largely compensated by higher demands resulting in greater excise and direct tax revenue.

It is time to cross my fingers in anticipation of how many of these anticipations match with those in the minds of the policy makers. Time would tell!

Wednesday, July 2, 2014


The absence of any views on the previous post has only motivated a further rush of thoughts which could be stemmed and rationalised by a healthy debate. Here would therefore be another set of suggestions for the consideration of the people at large and the powers that be in particular

 1)    Section 10(23C) of Income tax Act: The provisions of section 10(23C)(iiiab) provides for an exemption of income for education linstitutions which are wholly or substatantially financed by the Government and exist solely for the purpose of education and not for profit. These institutions need not be notified by any authority. It is found that a substantial amount of income is generated and the same is put to use for financing the institutions such as IIMs. In the absence of a definition for the term “ substantial, the room for differential interpretation lies open. Therefore, it is suggested that the term “substatantial” could be substituted by at least 50% of the funds are financed by the Government. Further, a clause may be introduced to make the application of the conditions u/s 11 mandatory for such institutions. This would lead to better utilization of funds within a period of 5 years as the taxability of income otherwise would stand attracted by virtue of section 11(3) of the Act.

2)   2)  Capital Gains on immovable properties: The present scheme of capital gains on immovable properties has multifaceted issues in implementation. These could be broadly classified as :
a)     Nature of property whether agricultural or not
b)    Location of property within 8 kms whether crow’s flight or road distance
c)     Date of acquisition
d)    Date of transfer
e)     Consideration for transfer
f)      In case of both land and building the apportionment of costs and treatment as long term and short term
g)     Deductions available and the fulfillment of conditions precedent
Evidently with these many factors involved the leakage of revenue would be substantial. In addition to these factors, the Hon’ble Apex Court has now added the intention of the transfer being instrumental in deciding whether the property was agricultural or not for the purpose of determining its taxability.
The issue could be resolved by adopting taxation at source on the lines of Securities Transaction tax which is enumerated hereunder:

a)     The concept of lease cum sale deed is a largely adopted practice by many local bodies. The lease period is ordinarily for a period of ten years. Considering the longevity of immovable properties, placing them on par with other assets gives it an unfair advantage leading it to be treated as a stock in trade though for taxation purposes it is held as a capital asset. Therefore, the period of holding of the asset in case of immovable properties needs to be enhanced to ten years to prevent speculative investments in the realty sector.
b)    In the light of the above, in such lease cum sale transactions the period of lease may also be included for the purpose of computing the period of holding provided the absolute sale deed has been executed before the next transaction.
c)     Any conversion of property from agricultural to non agricultural purposes should attract a levy of tax at source. For this purpose the guidance value of the agriculrtural land should be adopted as on the date of conversion. Considering the fact that civil constructions are governed by provisions of section 44AD which prescribe a threshold profit of 8% and adopting 20% rate for Long term capital gains the same would work to 1.6% i.e (8x/100) *(20%). Considering the fact that a large number of such transactions have gone untaxed and this would be additional source of revenue, a TDS @1.5% on such transactions would signify an additional source of revenue with lesser administrative inconveniences and costs.
d)    Any transfer of immovable property otherwise should attract a levy of 1.5% of the transacted value and TDS is to be collected.
e)     In case of transfer of immovable property in lieu of Transferable Development Rights (TDR), the  guidance value of the surrendered or transferred property shall be adopted and TDS recovered by the acquiring authority who is issuing the TDR. On such guidance value the TDS to e recovered should be at 1.5% on the same logic as given hereinabove.
f)      The recovery shall be effected by the registering authority and in the absence of such registration the seller and buyer shall be both held responsible for defaults.
g)     The capital gains tax so recovered shall be final on the lines of the STT for LTCG of shares.
h)    In the event the property is transferred within a period of the stipulated ten years then the TDS to be recovered shall be 4%. The present system of setting off the cost of acquisition and improvement against the consideration would at best result in a gain of 20%. At the prevailing rates of tax one can be charged taxes at the rate of 10% to 30%. Effectively the minimum rate would be 2% and maximum 6%. The average of the two could be placed at 4%. In case of corporate and firms this could still be retained at 6%.
i)       All the exemptions stipulated under the sections 54 onwards would get phased out making it a level playing field for all investors and realty agents.
j)       In the case of any investment in a residential house or agricultural land or the undertaking being shifted, on the same happening within a period of three years within the end of the financial year in which the original transfer took place, a tax rebate of the taxes so collected could be considered subject to the prevailing conditions. This would make the claim of rebate easily verifiable.
k)     Further, this rebate when given would be a set off on the taxes due for that year and would not result in a refund of taxes unless the TDS/TCS/taxes paid for that year exceed the taxes due.
l)       The on money portion, if any, found to have been transacted would have to be provided as unexplained expenditure in the hands of the buyer and income from other sources in the hands of the seller de linking the same from the transaction itself. Such an action would act as a deterrent to the on-money route combined with a low tax recovery rate with minimal hassles.
m)  In case of joint development, the capital gain is to be computed based on the guidance value as on the date of the agreement. The cost of the flats or developed property is also to form part of the agreement
The fact that the revenue of a single state would be around Rs 500 crores on an average would ensure a receipt of Rs 10000 crore to the exchequer with minimised leakages.

3)    Standard Deduction under Income tax Act: The salaried class needs to be given a relief on account of the rising inflation and no cushion being available for them to get relief on the tax front. The earlier standard deduction concept could be reintroduced in section 16 with a ceiling of Rs 1 lakh to be provided some relief on this front. Further, this would also prevent salaries being passed off as consultation or professional fees with a master servant relationship itself being a subject matter of legal disputes.

4)    Perquisites under Income tax Act: Large number of corporate are adopting a cost to company approach whereby the salary package is defined and on production of bills for incurring expenditure claims are allowed for exemption u/s 17 resulting in leakage of revenue on account of application of funds while the intention of the legislation is apparently to provide relief of taxation on such perquisites being provided by the employer in the form of bearing the cost of such expenditure either directly or by reimbursement in addition to the settled remuneration package. This results in the non-Government sector getting an unintended benefit whilst similar expenses are borne by the Government employees which may not be allowed as a deduction due to the application of the relevant Rules.

5)    Section 40(a)(ia) of the Income tax Act:  The provisions of section 40(a)(ia) should include the deduction u/s 192 of the Income tax Act to deter the employer from refraining from payment of both salaries as well as the TDS thereon by taking legal shelter under these provisions. Though the expenditure is claimed the words “payment “ in section 192 is relied upon to avoid deduction and remittance of TDS on salaries. In the absence of the disallowance clause also operating on these payments

6)    Slump Sale: In case of slump sale, the apportionment of cost to the assets acquired should be specified as a rule so as to avoid tax avoidance on this count.

7)    Section 201 of Income tax Act: The provisions of TDS and TCS are a code in itself and provide for collection of revenue at source. They also provide for an explicit provision of not being subjected to such mechanism in the form of provisions of section 197 and 206C(9). The proviso to section 201 and 206C(6A) introduced w.e.f 1-7-2012 provide an additional mechanism whereby if the deductor or collector obtains a certificate from the person from whom such tax is to be deducted or collected that a return of income including such income has been filed within the time limit stipulated u/ s 139, then only the provisions of interest shall apply.

The above gives rise to the following issues:
a)     Whether any short deduction or non-deduction shall stand condoned on a mutual agreement entered into by the two parties and only the certificate is issued.
b)    Whether the provisions of section 271C will have any import as the non deduction would now be no more an offence and an interest which is compensatory in nature prescribed.
c)     Since the mention is only of section 139, it could cover a revised return filed or even a belated return
d)    The provisions of section 139(4) provide for filing a revised return within one year from the end of the assessment year while section 201(3) bars any such action after the lapse of two years from the end of the financial year in which the statement is filed. In case of deductors who file timely TDS returns wherein shortfall or non-deduction is noticed, the time barring date coincides with the date of deductee filing a valid return. This means no order could effectively be passed u/s 201.

The following may be considered to restore the sanctity of these provisions ant to strengthen the provisions of TDS and TCS.

a)     The condonation can be considered if the deductee or collectee has paid the tax within the quarter in  which the tax was deductible or collectible
b)    The same is duly certified and is with the deductor or collector at the time of filing the TDS return and in any case not later than the stipulated due date for filing the same.
c)     The sum “tax” in such case shall be defined to mean the exact sum which was recoverable by the mechanism of TDS /TCS.
d)    The above will ensure that the mechanism becomes watertight and in any case the Revenue does not suffer loss in revenue or delayed remittances or leakages.
e)     It would also plug the escape route for non – reporting of transactions that should suffer TDS/TCS
f)      It should be made clear that where in consequence of on order u/s 201, the short deduction amount is remitted there shall be no issue of TDS certificates in favour of the deductee and a separate annexure shall be prescribed in the return to report such payments

8)    Section 194D of Income tax Act: The provisions of Section 194D provide for the deduction of tax at source wherein the insurance commission exceeds Rs .20000/-.   There are a large number of agents who receive commission which is less than Rs.2 lakhs and seek certificates u/s. 197 resulting in unnecessary  administrative inconvenience.  It is therefore suggested that such limit be enhanced to Rs.2 lakhs on  par with the thresh hold limit to minimize administrative inconvenience both to the Department and to the  insurance companies. This would be a reaasonble measure considering that TDS is effected on gross receipts as against the income on which tax is payable. In order to track the payments, the section could be amended on par with section 194C(6) whereby if the PAN is provided by the commission agent then no deduction would arise otherwise the provisions of section 206AA would apply.

9)    Section 192 of Income tax Act:  Deductors who have not effected salary payments take refuge in the wordings “at the time of payment, deduct income-tax”  in not effecting the TDS.  Though the remaining portion of the sentence r.w.s.15 would show that tax is to be deducted at source once the salary  payment is approved or paid  whichever is  earlier.  The use of the term payment as against the wording in other sections have let to a legal mischiefs.   It is therefore suggested that a clarificatory amendment be made explaining the term payment to mean accrual or payment, whichever is earlier.   This is warranted since the deductee would have to offer such income for tax on such basis as per section 15 of the Act.   It would  lead to a situation wherein the deductee would fight his return and pay the taxes irrespective of the fact as to whether he has received salary or not.  Thereafter the employer could invoke the proviso to sec.201 and state that the taxes have been paid by the deductee resulting in liability only on interest.   However, in such cases the taxes would have been paid by the deductee even before the deductibility is due as per the deductor’s version.   This would lead to a situation where sec.192 and 201 are rendered redundant.  Therefore, the intent of the legislature has to make clear by virtue of an amendment which would be a labour welfare measure.  Further, this section also needs to be included u/s.40a(ia) to ensure that  deductors  do not withhold  salaries to avoid TDS  or disburse salaries without TDS in the absence of a penal provision of disallowance of the expenditure.   

10)    Chapter VI-A – Deduction vs Rebates: The deductions under Chapter VI A of the Act have led to issues of disparities and legal wrangles which are brought out hereunder:

a)     The deductions envisaged u/s 80 C to 80 GGC  constituting the Part B of the said Chapter, provides for deductions. These deductions benefit the highest bracket with a 30% relief for identical sums of investments, charities etc against 20% for the lower and 10% for the least bracket. It does not in any case motivate the person below the threshold limit.
b)    The deductions under Part C of the said Chapter, leads to a large number of litigations as to whether such deductions can be offset against the tax leviable on other sources of income. Many verdicts opine that these sections only determine the quantum of eligible deduction and are admissible against the gross total income. Therefore, it provides scope for set off against other taxable income.
c)     In respect of deductions such as section 80DD and 80DDB, the deduction is at a flat rate irrespective of the number of such dependants for whom the deduction is applicable leading to severe cases being affected adversely.

In the light of the above and the principles of progressive taxation being applied as well as the fact that there is a need to promote the investment climate, support essential expenditure and boost small savings it is suggested as under:

a)     The deductions u/s 80 C to 80GGC could be classified in the nature of expenditure, savings and investment except for section 80DD and section 80DDB.
b)    In respect of savings a tax rebate of 10% of the amount invested in the savings should be allowed as a tax rebate subject to a ceiling of Rs 20,000/-
c)     In respect of expenditure  such as rent not covered by HRA, education loan interest and donations to eligible trusts covered u/s 80 G, the tax rebate should be at the rate of 20% subject to a ceiling of Rs 40,000/-
d)    In respect of donations to 100% category under the present section 80 G and the present 80 GGA, the tax rebate shall be 100% of the tax subject to a ceiling of the tax payable.
e)     In respect of the present section 80DD and 80DDB, the tax rebate may be at 20% of the expenditure incurred irrespective of the number of dependants subject to such details being given in the return of income wherein the dependant s Aadhaar or PAN could be used as a testimonial at return filing level with Form 10 I continuing to evidence for any further proceedings.
f)      In case of investments, the tax rebate shall be at the rate of 30% of the investments made subject to a ceiling of Rs 1 Lakh.
g)     In respect of the present Part C, the rebate shall be at a fixed percentage subject to the condition that such income forms part of the total income after all set off provisions have been invoked. This would lead to a substantial clarity in the matter and minimize the loss to the exchequer on the basis of such claims.

The above would mean that the lowest bracket would get motivated to invest as it fetches a better tax benefit while the higher bracket would additionally save to earn a tax benefit. This would lead to channelizing the funds into the exchequer and also be a means to control inflation driven by high consumerism. It also retains the character of progressive taxation as against making the rich richer by providing higher tax benefits in the form of deductions. The outflow is revenue neutral in case of d) above while provides a buffer for the lower bracket to meet its needs in case of c) above. The ceiliong amounts shall be in respect of the rebate and not the qualifying amount which would motivate more funds to move towards investment, followed by expenses for essentials as well as sharing of Governmental expenditure in the form of charities followed by savings boosting the internal climate of investment. This would also partially move the cash locked up in fixed deposits and such other instruments to investment mode.

11)                       Tax Collection at Source-  a new source- Foreign Exchange Remittances- Inward and Outward:  The mechanism of tax collection at source could be used to track and tap foreign inflows as well as outflows. There are substantial instances wherein non-residents pass off as residents for several transactions resulting in such income not suffering the provisions of TDS. Further, with an expanding global economy as well as to have financial intelligence on such transborder transactions, there is a need to introduce a tax collection at source mechanism at a nominal rate of 0.01% on the inflow as well as outflow. In case such income constitutes a part of taxable income then the same may be allowed as a tax credit and in all other transactions it would partake the character of a transaction tax. This would boost revenues as well as provide valuable intelligence for the revenue authorities and all other law enforcing agencies. The banks may be provided to be the nodal point to collect the tax.

12)                       Rationalisation of TDS provisions: There are certain professions such as consulting doctors whose payments especially in cases covered by TPAs are not determined till the end of the year. This results in doctors paying substantial self assessment tax. Similarly, there are cases wherein the back offices located in India function on a cost plus 10% basis resulting in the entire profits being deducted as tax at source and affecting their liquidity adversely. Therefore, there is a need to rationalize these provisions. Accordingly, the following suggestions are placed:

a)     An option for the deductee to ask the deductor to deduct higher tax than stipulated in the Act is to be provided for. This would ensure that the persons who derive unforeseen income in the last month do not suffer interest for the accounting policies of the deductor.
b)    In the case of application of section 206AA of the Act, there is a discrepancy in the penal clause of standard application of 20%. While and individual who is to be subjected to provisions of section 194C suffers 20 times the tax deduction, the person who is liable to be subjected to provisions such as 194J or 194 H  pays only twice the amount. The latter category could include corporate too. Therefore, it is suggested that the deduction under section 206AA be  made three times of the prescribed rate for residents and 20% for non- residents.
c)     The clause (6) of section 206AA creates a charge to deduct at a higher rate where the deductee fails to furnish a correct and valid PAN. However, there is no charge if the deductor commits the error. This leads to inequity since the failure of the deductor leaves no option for the deductee from whom practically the additional sums are being recovered. Therefore, this loophole needs to be plugged.
d)    There is a need to provide a window for correction wherein the provisions of Rule 37BA apply or the name of the concern is indicated instead of the proprietor or the PAN having been deleted in a de-duplication exercise or taken over by someone else as these entries ar genuine in nature.
e)     The need to place the rate of deduction at 8% as against the 10% in section 194J is to be considered in respect of non- proprietory and in such an event the threshold limit could be removed for the deduction
f)      In respect of proprietory concerns the same could be placed at 8% considering the tax slabs with the existing threshold limits.
g)     A similar amendment could be contemplated in case of commission and brokerage u/s 194 H.
h)    The issue of the residential status of the deductee at the time of deduction becomes a moot issue as this cannot be determined at least till the passage of 182 days. Therefore, there is a need to delink the residential status from the TDS provisions or provide a mechanism for determining such residential status in cases wherein the assessee was abroad for a part of the period April to 3rd October of the financial year.
i)       In case of DTAA relief is given for a person who suffers tax in both the countries on the same income. This has largely been interpreted to mean the withholding of tax which could be claimed as refund. In such an event for the relief to be admissible the need to file a return in the other country and not claim a refund thereon or the disclosure of the assessment particulars of the other country is to be made. This data could be exchanged by the different countries to tackle global tax planning or evasion.
j)       The logic of integrated contracts which have multiple facets such as rent, commission, contract and professional fees merged into a single transaction is being sought to be brought under the purview of the highest tax deduction slab. As against the deductors venture to bring it under 194C.  This aspect needs to be clarified by an explicit provision in respect of composite contracts.
k)     Similarly, in respect of tenders floated by Government, the impact of a turnkey project exists. Persons take shelter under the provisions of Section 194C (3) and seek to exclude the material value which is delivered with invoices. This aspect also needs reconsideration especially in light of the fact that there would be no escalation in material costs provided and any escalation would have to be borne by the contractor.
l)       The provisions of Section 206C regarding bullion should refer to the ceiling amounts as for a single year and not for each transaction.
m)  The provisions of section 206C should provide for collection of tax at twice the rate in case PAN is not furnished.
n)    In the light of the decision in the case of Anusuya Alva by the Hon’ble High Court of Karnataka, it would be necessary for the Parliament to override the decision by explaining the import of the provisions of section 139A(5B) of the Act.
o)    The Rules for remittance of TCS do not distinguish between Government deductors who pass the transactions through book adjustment from others. Since such tax is also governed by the financial rules for inter Governmental transactions parity is to be brought to the same.
p)    The provisions of TDS should be made applicable in cases wherein payments fall u/s 40A(3) where the aggregate sums so paid exceeds Rs 20000/- and no PAN is furnished in consonance with section 206AA. This will expand the scope of TDS
q)    The provisions of section 40A(3) should also bring specifically under its ambit the head of purchases.
r)      In case of slump sales the provisions of TDS should be made applicable. Further, the mechanism for the buyer to apportion the cost to the value of the assets is also to be prescribed.

13)                       Threshold Limit: The threshold limit for taxation needs to be enhanced to Rs 3 lakhs. A fresh slab of 5% may be introduced upto Rs 5 lakhs to reduce the tax impact on the lower class. Another slab of 35% may be introduced for income of Rs 1 crore and above.

Similarly, the non-personal taxes i.e in cases of entities other than individuals and HUF wherein the tax begins from the Re 1/- should be brought down to 25%. This would lead to a growth towards corporatization of businesses in cases wherein the income crosses Rs 1 crore.

14)                       Service tax: A large number of services have been brought under the service tax net. This is attracting a service tax of 12% in most cases. The Arthashastra which was also followed by Raja Todarmal of Emperor Akbar’s court laid down that a maximum levy could be 1/8th which works out to 12.5%. Considering the inflationary tendencies of indirect taxation there is a need to scale down the level of indirect taxes to a maximum of 8%. This would ease the inflationary pressure and give an offset to multiple taxes on the income earned. The incomes as well as expenditure being taxed at present means that a share of more than 1/5th goes to the Treasury which needs to be redressed.

 15)               Excise Duty on petroleum and fuel:The basic element of petroleum and fuel suffers multiple taxes at State and Central level. Considering the potent cascading effect it has on the economies at the micro level as well at the fact that the duties levied on the value i.e the ad valorem in fact means more receipts to the exchequer at each price rise. This is an unintended result. Therefore, it should be fixed that at no point of time the total of all levies can exceed 8%. To achieve this end, the Centre could levy a tax of Re1/- for every Rs 25/-. This would effectively mean that a 4% tax is levied but would prevent additions on tax value as the prices rise. This would create additional liquidity in the hands of the people to generate further income whilst slowing the pace of inflation. This single levy should take care of central taxes and no excise duty or customs duty is to be charged. The deficit in revenue pool would be considerably offset by the capital gains tax on immovable properties as well as the income generated out of the additional liquidity leading to growth in direct taxes. The rationalization of the rates of personal and corporate tax would also enhance compliance levels. This should be further incentivised by making it mandatory for all vehicles manufactured or imported to be solar powered with a deadline of 3 years. This would minimise the consumption of crude which could be factored only as a reserve fuel in such vehicles. The existing vehicles would be phased out and this would also provide the much needed fillip to the auto industry.

16) Dispute Resolution : Undoubtedly, issues such as transfer pricing, advance rulings are matters of concerns of the corporates. As a largesse, the provisions of avoiding repetitive appeals could be enlarged to allow both the Government and the taxpayer to bind themselves to any litigant's case before the Tribunal rendering meaningless assessments being repeated or infructuous demands being raised. However, in all such cases the referred dispute should be adjudicated by the Apex Court within 6 months resulting in laying down of the law for all the cases which have bound themselves to it.

17) Holiday: A holiday on verifications could be considered for one year to facilitate the reconciliation of existing demands with the taxpayers and resolution of grievances. The only verifications could be in the form or preventive or investigations by means of searches or confiscations which are warranted to ensure that no stray element misuses the scheme.

18) Bottom Top Approach:  There is a need to involve the field formations in identifying and resolving issues. It must be borne in mind that not all wise men can be at the helm of affairs. Laymen can provide valuable insights and simple solutions to complex issues. The culture of adapting to the suggestions from the taxpayer and corporates should be extended to the front desks who in reality implement these laws.

Some of the suggestions in the earlier post are elucidated hereinabove to facilitate a healthy debate. The need for the Government to also consider overhauling of the Departments wherein there is a gap between the macro approach and the microneeds. The need to orient policy making by classifying the large volumes of low revenue generators and small volumes of high revenue generators is the need of the hour. Corporate lobbies which presume that every nook and corner of the nation are on par with them or their lower level of existence is on account of the inefficiency as a blanket rule is to be shown the door.