The Central Board of Direct Taxes (CBDT) has ruled out any reconsideration of the equalisation levy, which is popularly referred to as Google tax, as it is imposed on internet and e-commerce firms.
Equalisation levy of 2 per cent was imposed on the foreign internet companies in 2016 to create a level playing field between the Indian and foreign firms.
CBDT - the country's apex tax authority - has also said that residency rules for non-resident indians (NRIs) stranded in India due to the pandemic in the current financial year will be clarified in due course.
On equalisation levy, CBDT Chairman PC Mody told Business Today, "Lot of online transactions and e-business are taking place. It has been a subject matter of discussions at the multilateral forums as to what should be the rightful share of any tax jurisdiction to tax that portion of the business and the manner in which it has to be done. India has also taken a lead on that and come up with the equalisation levy. So I think it has to be seen in that perspective."
"There is no rethink at the moment. We need to understand the fundamentals. The manner in which the business is being conducted now has undergone a massive change compared with how it used to happen earlier. The pandemic has only augmented it," Mody added.
It may be noted that not even a month ahead of the Budget, the US Trade Representative (USTR) said in a report that taxes levied on the digital services by India are discriminatory against the US companies.
In the run up to the Budget, one of the key demands had been a clarification on the tax residency status of the NRIs stuck in India in the current financial year. However, no decision to the effect has been announced as the tax department is awaiting more clarity on travel restrictions.
"For the current financial year, the travel restrictions and international travel are yet to be eased out completely. Once that happens, we will take a call on that. We need to understand the problem and its impact first. Only then can we take a call. For the current fiscal we still have to see how things unfold," Mody added.
On the direct tax collection targets for 2021-22, Mody said that the projections are "realistic and not ambitious". Taxes on income has been pegged at Rs 5,61,000 crore for 2020-21, against Rs 4,59,000 crore in the revised estimate for the current financial year. Corporate tax collection has been pegged at Rs 5,47,000 crore for 2021-22.
"We are confident about achieving the target. I would suppose that the kind of changes brought about in the tax administration will also strengthen our hands in achieving the targets," Mody said.
Elaborating on the facilitation provided to the taxpayers, Mody said, "The changes are faceless assessment, penalty and appeals. There is an ease with which one can file his returns as we are populating the tax portal of the individual with earning details from other third parties like banks and others. This is a kind of checklist to the assessee. The assessee can even edit and make corrections to the data shared by the third parties and accordingly file returns. We are essentially trying to give a push to voluntary compliance by creating an enabling environment."
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