More income tax on super-rich e-commerce liens, covid cess: this is what the IRS “STRENGTH” report proposes

IRSA recommended that compliance be encouraged through tax discounts and reimbursements in percentage points. Representative image: Reuters

The Income Services Association of India (IRSA): A national tax officials body has recommended the government to impose taxes on the super wealthy, increase the surcharge on foreign companies in India, impose an additional 4% cessation one-time because of Covid relief, incentivize the contribution to the PM CARES Fund through tax incentives, introduce a new tax saving scheme to mobilize more funds, etc., among the short-term measures (three to six months ) for income mobilization. The recommendations are part of a document called Fiscal Options and Response to the Covid-19 Epidemic (F.O.RC.E) presented to the Central Board of Direct Taxes (CBDT) on the economic impetus to combat the pandemic and revive the economy. However, IRSA in a tweet later on Sunday clarified that the policy measures suggested to the CBDT “are not intended to represent the official views of the entire IRS or the IT Department.”

The document, presented by 50 IRS officials, said that high-income workers can be taxed through two alternative means for a limited or fixed period of time: “raising the highest slab rate to 40 percent for levels of total income above a minimum threshold of Rs 1 crore or reintroduction of wealth tax for those with a net worth of Rs 5 crore or more. “

Unlike surcharges, the document noted that assignments have a broader base, as they are imposed on all taxpayers, although they are also likely to mobilize more income. Therefore, he recommended that “an additional one-time 4% termination due to CovidRelief (could be called COVID Relief Cess) could help finance the capital investment in COVID Relief work. The additional income mobilized in this account could be between Rs. 15000 – 18000 rupees “. The current dropout rate is 4 percent, including 2 percent dropout and 2 percent dropout.

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Even though the donation made to the PM CARES Fund is eligible for the tax deduction under section 80G, the tax officials agency requested more incentives for taxpayers to contribute more to it. He suggested that the deduction to the fund and the CM Aid Funds should be allowed as a deduction “in the coming years (eg within 3 years) rather than just in the fiscal year 2020-21, at the adviser’s option “

Among the medium-term measures, from nine to 12 months, for the government to mobilize revenues, according to IRSA, should include encouraging compliance through discounts and fiscal reimbursements in percentage points “taking into account the genuine difficulties that taxpayers faced during this crisis global”. said the note. He also called for increasing the matching levy on foreign companies operating in India without a permanent basis, following the finance bill, 2020 recently proposed to include the profits of e-commerce operators from their offer or services and taxes at a rate 2 percent.

“Increasing the business of these e-commerce / online streaming / web services companies provides the opportunity to increase these tax rates by 1%, that is, from 6% to 7% for advertising services, and from 2% at 3 percent for e-commerce, “IRSA said in its recommendations. The matching tax collected was Rs 550 crores for FY18 and Rs 939 crores for FY19. The rate increase is likely to contribute a” good amount “as user reliance on online commerce has allowed online commerce or the digital economy to flourish.