Tax simplification, clarity in tax laws, dispute resolution and easy compliance are among the top demands of respondents to a KPMG in India survey, conducted this month to capture the mood as the Government of India undertakes a comprehensive review of the Income Tax Act, 1961.
Focus on tax simplification and dispute resolution
A significant 84% of respondents emphasised the need to reduce tax litigation, which remains a major concern for businesses. Another key area identified was the simplification of tax deducted at source (TDS) provisions, with 64% urging a reduction in the complexity of over 30 different TDS categories.
With more than six lakh tax cases pending, including approximately 5.5 lakh at the Commissioner of Income Tax (Appeals) level, respondents suggested measures to accelerate case disposal. About 69% supported introducing a mediation or arbitration scheme to resolve disputes efficiently. Additionally, 62% felt that allowing tax authorities to appeal against Dispute Resolution Panel (DRP) orders would enhance the process.
Greater clarity in tax law interpretation
To reduce ambiguity, 96% of the participants recommended a government-authored income tax commentary similar to the OECD model. Meanwhile, 93% suggested incorporating existing clarifications from circulars and notifications directly into the Act to improve the uniform application of tax laws.
Compliance and faceless assessment
The government’s shift to a faceless tax regime has seen mixed reactions. While 61% prefer a hybrid model of faceless and in-person interactions, 35% support a complete transition to faceless assessments. Only 4% favoured a return to offline interactions.
In terms of compliance burden, 87% of respondents advocated for eliminating mandatory TDS certificates, given that TDS details are already reflected in Form 26AS. Additionally, 82% suggested extending the deadline for filing belated or revised returns to March 31 to provide taxpayers with more flexibility.
With a large backlog of appeals at the CIT(A) level, 98% of respondents called for mandatory timelines for appeal disposals.
Views on corporate tax rates and transfer pricing
While 58% of respondents supported lowering corporate tax rates, about one-third expressed satisfaction with the current tax structure. On the transfer pricing front, 94% recommended expanding safe harbour rules to encourage compliance and reduce disputes.
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Though industry players welcome the government’s tax simplification initiative, 56% believe that immediate material changes may not be feasible, advocating a gradual, phased approach to reform. As the process unfolds, businesses hope for a more streamlined and transparent tax regime in India.
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(Edited by : Shoma Bhattacharjee)
