Budget has devils in tax details; huge hikes in penal interest, says industry body
Updated: Jul 14, 2014 11:50:29am
Detecting devil in details in the Budget, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) Indirect Tax Committee has said that the other major irritants and problems which increase cost and time for compliance depriving the businesses the ease of doing business relate to obligation to furnish information return by assesses, making multiple assessment for the same period and mandatory filing of appeals in the Supreme Court against the tribunal orders.
"Some of the measures in the Budget are retrograde and need to be revisited," Chairman of the ASSOCHAM Indirect Tax Committee J K Mittal said.
Agreeing with him, the chamber Secretary General D S Rawat urged Finance Minister Arun Jaitley to delve into the details and correct the situation. "Before the Budget is passed, we hope Jaitley given his background of a brilliant lawyer will get rid of some of the irritants which do not bring much revenue to the exchequer but give enough leeway to the officers to misuse the powers".
As per the budget proposal, with effect from 1 October 2014, service tax assesses have to pay interest at the rate of 30 per cent per annum for delay in payment of tax beyond one year and at the rate of 24 per cent per annum delay beyond six-month and up to one year and at the rate of 18 per cent interest per annum delay below six-month. Such a high rate of interest is unwarranted and it has no justification at all, according to the chamber’s press release.
“Firstly, Ministry of Finance does not pay even a single penny of interest, when the assessee deposits amount, during the pendency of any case, even the duration of this deposit may be more than 5 to 10 years. Secondly, delay in payment of tax, also attracts separate penalty,” the release said adding, “Therefore, the Ministry of Finance not only takes interest but also penalty also, for delay in payment of service tax and excise duty.”
According to the Budget proposals, assessees under the customs, central excise and service tax have to make mandatory deposit of 7.5-10 per cent (with a cap of Rs 10 crore) of the demand and penalty before filing an appeal before the commissioner (appeals) or to the tribunal.
Such deposit will not attract any interest. Also, there is no provision of returning such deposit, Assocham said. (KNN/SD)