Income tax: Unorganised sector ought to be in tax net, says CBDT chief

With the common man still facing the conundrum of whether to avail lower tax by foregoing all exemptions or stay with the old regime, Central Board of Direct Taxes (CBDT) Chairperson P.C. Mody on Tuesday said that the unorganised sector is ought to be under the tax framework. At a conference organised by FICCI here, the CBDT chief said that having a broader tax base would result in lower tax rates across the board.

To a query regarding taxing rich farmers, Mody responded by saying: "There is an equal portion in the unorganised sector (as compared to agriculture) which is going untaxed and they ought to be in the tax framework."

"More broader the case, the better case there would be for more tweaking of the income tax rates also," he added.

Mody said that those in the unorganised sector can be motivated to come under the taxation framework, if they are assured that they would not have to face harassment and the taxpayers should be provided with information so that accuracy of return filing will improve.

Regarding the new optional income tax regime announced in the budget, the CBDT Chairman said that young people are likely to prefer the new regime.

Informing the that the contents of the proposed income charter will soon be released, he said that the stated policy of the government is to do away with exemptions and deductions of course in a phased manner.

Among several proposals on the direct taxation front, Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2020-21, proposed a tax payers` charter in the Income Tax Act to ensure fairness to all assessees and to make sure that officials in their quest to collect taxes do not end up harassing citizens.

She also announced a new tax regime with lower tax rates, but at the cost of exemptions and deductions. A taxpayer opting for the lower tax regime would have to forgo all the deductions and exemptions availed by him in the old regime.

See Zee Business Live TV Streaming Below:

The Finance Minister Nirmala Sitharaman presented her first full Budget 2020 of the Narendra Modi 2.0 government on 1 February.