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06/01/2022 04:08pm

Budget to incentivise transition of informal into formal sector

image Budget to incentivise transition of informal into formal sector

New Delhi, 6 Jan (KNN) The Union budget for FY23 is likely to announce steps to reduce tax litigation, boost compliance by greater oversight of transactions, and work towards the goal of bringing more firms into the fold of the formal sector. 

Among the steps under consideration are amendments to a dispute resolution scheme announced last year, clarificatory amendments  to both Income Tax Act and indirect tax laws to make doing business easier, and increasing reporting requirements under various provisions to further aid non- intrusive tax administration, as reported by mint.  

The broad idea is to make tax administration simpler and get the departments more access to information related to transactions while facilitating voluntary compliance.

The income tax department has been encouraging digital payments and has gradually expanded the levy of taxes to be collected or debited at source to track transactions in the economy.

The government may also tweak the contours of a dispute resolution scheme announced last year for small taxpayers to make it more attractive. The scheme was announced for small taxpayers with an income of less than INR 50 lakh, for disputed income less than INR 10 lakh.

The emphasis on improving tax compliance comes at a time both the direct and indirect tax administrations have tasted success in leveraging technology and data analytics to nudge assesses to report their tax liability correctly and in checking tax evasion.

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