Finance Minister targets 'tax terrorism', announces THESE measures

Finance Minister Nirmala Sitharaman

New Delhi, Aug 23:  Finance Minister Nirmala Sitharaman announced a slew of measures on Friday in an attempt to revive the sagging economy.

Amidst concerns of rising harassment of corporates by tax officials and authorities, the Finance Minister said on Friday that the government would take measures to curb such instances, including the introduction of "faceless" tax scrutiny from the upcoming "Vijaya Dashami".

She also said that tax notices and summons without a computer generated unique ID number would not be valid. This measure would help in curbing the unauthorised tax summons.

On violation of corporate social responsibility norms, the Minister said that such violations would not be treated as criminal offences. Prosecution will be replaced with a more humane approach. Wealth creators will be honoured and respected.

In a major relief to entrepreneurs and startups, Sitharaman announced that the 'angel tax' provision will be withdrawn for startups and their investors.

Announcing measures to boost the subdued economy, the Finance Minister said that Section 56 2(b) of the Income Tax Act will not be applicable on startups registered under the Department for Promotion of Industry and Internal Trade (DPIIT).

Angel tax has been a major issue among entrepreneurs and in the startup ecosystem. Although the government had announced some measures earlier, the startups were not satisfied and wanted a complete revocation of the tax liability.

Sitharaman also announced several other measures to ease tax liabilities and address the ongoing concerns of tax harassment by tax officials.

Giving in to the demands of overseas investors, the Finance Minister also announced a rollback of enhanced surcharge on foreign portfolio investors levied in the Budget.

Surcharge on long and short term capital gains arising from the transfer of equity shares has been withdrawn, she said.

"The pre-Budget position is restored," the minister said.

It is being done to encourage investment in the capital market, the finance minister said.

The decision taken in the Budget to levy enhanced surcharge had spooked the stock markets.

Following the increase in surcharge in the Budget, the effective income tax rate for individuals with a taxable income of Rs 2-5 crore went up to 39 per cent from 35.88 per cent and for those above Rs 5 crore to 42.7 per cent.

Earlier this month, capital market participants and foreign institutional investors presented a charter of demands to Sitharaman, which included a rollback of surcharge on FPIs and review of dividend distribution tax.

Sitharaman further said that to mitigate genuine difficulties of startups and their investors, it has been decided to withdraw angel tax provisions for them.

A dedicated cell under a member of CBDT too will be set up for addressing the problems of startups.

News24 Bureau with Agency inputs

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