India: India continues to promote domestic business environment

Rakesh Dharawat		Hariharan Gangadharan

In its push towards positioning India as an attractive investment destination and to improve the ease of doing business in the country, the Government has announced further tax initiatives.

Addressing taxpayer grievances in respect of high-pitched scrutiny assessments

The Central Board of Direct Taxes (CBDT) has issued an instruction for constitution of 'local committees' across the country to deal with taxpayer grievances in relation to high-pitched scrutiny assessments. Noting the tendency on the part of tax officers to frame high-pitched and unreasonable assessments orders, the CBDT instruction proposes to lay down an institutional mechanism to resolve taxpayer grievances. The committee will comprise of three income tax officers of the rank of Commissioner of Income-tax who are required to address grievances received from taxpayers. The committee is required to address the grievance petition within a period of two months and send a report to the concerned Principal Commissioner of Income-tax, who shall, after considering the views of the committee, take suitable administrative action, wherever required. The departmental position determined by the local committee will also be appropriately presented before appellate authorities so as to curb litigation.

The CBDT instruction has also set out various factors to be considered by the committee while dealing with the grievance petition, which include non-observance of principles of natural justice, gross misinterpretation of law/facts and non-application of mind on the part of the tax officer.

Simplification of the Income-tax Act, 1961

The government has also announced the setting up of a committee to simplify the provisions of the Income-tax Act. The committee is to be headed by a retired Judge and is comprised of nine other members who are either outside experts or government officials. It is charged with:

• studying and identifying provisions/phrases in the Act that lead to litigation due to multiple interpretations;
• studying and identifying provisions that impact the ease of doing business in India;
• studying and identifying provisions of the Act that warrant simplification; and
• suggesting alternatives and modifications to the law so as to bring about predictability and certainty without substantial impacting the tax base and revenue collection.

The committee is required to put its draft recommendations in the public domain and to formalise them after stakeholder consultations. While the committee has been given a term of one year, it is required to submit its first batch of recommendations by January 31 2016.

Rakesh Dharawat (rakesh.dharawat@dhruvaadvisors.com) and Hariharan Gangadharan (hariharan.gangadharan@dhruvaadvisors.com)
Dhruva Advisors
Tel: +912261081000
Website: www.dhruvaadvisors.com

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