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Niti Aayog unveils 3-year plan for power and energy

Construction and the third and fourth units at Kudankulam should be actively pursued.

Government think tank NITI Aayog, in its report titled ‘Three Years Action Plan’, has endorsed doing away with corporate tax exemptions in the next three years to improve tax collections. Additionally, the report also bats for exempting the un-incorporated entities of tax liabilities and their income taxed in the hands of individual owners to avoid taxing income twice.

On the personal tax front, the report noted that only 3.65 crore of the total population files income tax returns. To expand the personal income tax base, the report suggested that the nominal income exemption should remain unchanged such that the real value of the threshold is reduced, leading to the inclusion of a greater proportion of individuals in the tax net over time.

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On the indirect tax front, the Aayog report said the GST system will expand the tax base which would enable the government to lower the tax rates without loss of revenue. On custom duty, it said all custom duties should be unified at 7% without violating the World Trade Organization (WTO) obligation. “Once duties are unified at a single rate, no basis for complaints regarding inversion of duties will go. The 7% rate will also lead to a substantial rise in custom revenue,” the report said.
State governments should also stamp duty inclusive of property registration fee to 3-3.5% to curb the black money generation in the sector, the report said.

“It’s important to note that, in the past, some states which reduced stamp duties gained revenue perhaps because of an increase in declared property value by buyers,” it added. Moreover, to improve tax administration and minimise litigation, the report suggested reduction in scope for interpretation of tax laws, creation of separate dispute management vertical under indirect and direct taxation boards.

It also recommended performance assessment of tax officials based on the success rates of their cases. This is reflected in the low success rate of 30% achieved by tax officials in tax appeals filed by taxpayers across different courts.