NEW DELHI, Apr 30: Seeking to calm investor jitters, Union Finance Minister Arun Jaitley today offered tax relief to FIIs by exempting some of their income from MAT and announced that an “extremely simplified” income tax return form will soon replace the controversial 14-page ITR that sought details of all bank accounts and foreign trips.
Replying to the debate on the Finance Bill, 2015, in Lok Sabha, he said Prime Minister’s social security schemes will be exempt from service tax and also tinkered with indirect tax rates on raw silk, iron ore and rubber.
With funds fleeing India as the row over 20 per cent Minimum Alternate Tax (MAT) on capital gains they made in past three years escalated, Jaitley offered relief by exempting income foreign firms earned from securities transactions and interest, royalties and fees for technical service from MAT.
The exemption would apply only in those cases where the normal tax rate is below 18.5 per cent.
He, however, offered no relief retrospectively as has been demanded by foreign portfolio investors.
The rules for the application of MAT for real estate investment trusts were also eased.
Later, the Finance Bill was passed by voice vote, bringing to close the three-stage budget process in the House.
On the indirect tax side, export tax on low-grade iron ore was cut to 10 per cent from 30 per cent, in a bid to boost shipments of the steelmaking raw material from Goa.
The new duty structure will be applicable from June 1, Jaitley said.
Referring to the controversial new ITR form, he said an “extremely simplified” income tax return form will soon be brought.
“I am having the entire matter reviewed and very soon you will hear an extremely simplified procedure coming for us,” he said. “Recently, a controversy did come up. There is an old income tax form of 12 pages which was made thirteen-and-half pages. I was out of the country when this was done, I had it stopped.”
Buying peace with RBI, Jaitley dropped plans for the time being to strip the central bank of powers to regulate Government bonds and give it to an independent agency.
Jaitley sought the cooperation of the opposition for reforms measures like Land Acquisition Bill saying the country needs to take advantage of the global situation to push growth.
“If we can put our house in order and put an end to political obstructionism, if States can come together, that will add to national growth rate,” he said.
He exempted service tax on life insurance business provided under Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Jan Dhan Yojana as well as on general insurance business under the Pradhan Mantri Suraksha Bima Yojana and the services provided by contribution collecting agencies in the Atal Pension Yojana.
He raised the basic customs duty on natural rubber from 20 per cent or Rs 30 per kg, whichever is lower, to 25 per cent or Rs 30 a kg, which ever is lower.
Stating that MAT on FIIs has been done away with from April 1, 2015, the Finance Minister said the issue regarding levy of the tax in past cases was now pending in Supreme Court.
“Yesterday, the matter was mentioned. The Supreme Court has said they will fix up after the summer vacation some date of hearing and that is not an issue I have announced today,” he said.
With a view to provide a level playing field to domestic defence manufacturers in private sector viz-a-viz public sector, he withdrew the excise duty exemption available to defence PSUs and ordinance factory boards.
“I propose to withdraw the exemption of additional duty of customs, CVD and SAD in certain cases. These imports will however continue to remain exempt from basic customs duty,” he said adding direct import of such goods by Central and state governments will remain exempt from customs duty.
The changes will become effective from June 1, 2015.
Meanwhile, an “extremely simplified” income tax return form will soon replace the controversial 14-page ITR that sought information like all bank accounts and foreign trip details, Jaitley announced.
“I am having the entire matter reviewed and very soon you will hear an extremely simplified procedure coming for us,” he said.
Referring to the criticism of new 14-page income tax return (ITR), he said the entire issue has been reviewed and the form will be based on feedback received from the industry and MPs.
“Recently, a controversy did come up. There is an old income tax form of 12 pages which was made thirteen-and-a-half page. I was out of the country when this was done, I had it stopped,” he said.
The Finance Ministry is considering easy taxation form which an “assessee can do things himself and does not have to run to various advisers”.
Many members cutting across party lines had criticised Government for issuance of a new tax return form saying that the present form impinges on the individual’s privacy as it seeks details of all bank accounts and foreign travel.
Earlier this month, the Central Board of Direct Taxes (CBDT), the apex policy making body of the Income Tax department, notified the new ITR forms for the current assessment year, seeking additional details to check the menace of black money.
As it stands, the new ITR forms, including the ITR-1 and ITR-2, require an assessee to furnish the number of bank accounts held by the individual “at any time (including opened/closed) during the previous year” with the last balance in the account on March 31 of the just-concluded fiscal.
The assessee will also have to furnish the name of the bank, account numbers, their address, IFSC code and any possible joint account holder.
When it comes to disclosure of foreign travel, the taxman wants the assessee’s passport number, its place of issuance, countries visited, number of times such sojourns made and in case of a resident taxpayer, the expenses incurred from own sources in relation to such travel.
The I-T Department last year had made it mandatory for taxpayers to mention details of all assets they hold in a foreign soil under a new schedule- details of foreign assets and income from any source outside India.
The new measures are part of the Government’s effort to tackle black money in an non-obtrusive manner. The details will add to the taxman’s knowledge about a particular assessee.
The new ITR forms, this time, also feature a new column to include the Aadhaar number of the assessee. (PTI)
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