Former finance minister P Chidambaram on Monday urged the government to replace the existing income tax law with the direct tax code and cast doubt on projections for nominal GDP growth of 11.2%, claiming that the war in Ukraine has blocked supply chains and that certain sectors have seen a sharp rise in prices.
Taking part in the debate on the Appropriation Bill and the Finance Bill in the Rajya Sabha, Chidambaram joked that “no one benefits from this income tax law except the experts- accountants and lawyers.
He cited section 10(23)(c) of the Income Tax Act which runs to eight pages and said that “the clause is amended by (a) a bill where the paragraph 23 (c) alone occupies nine pages”.
“There will come a day when a charity or a religious institution will say, ‘Let’s get out of the clutches of the Income Tax Act and pay the taxes.’ Today, most charities and trusts are crippled by these provisions and the changes repeated year after year,” the congressional leader said.
Union Finance Minister Nirmala Sitharaman is expected to respond to the budget debate on Tuesday.
Chidambaram also tried to find loopholes in the tax authorities’ “faceless assessment” system. Comparing with the previous system where an officer knew all the records of an assessee, the former minister said: “We don’t know who the assessment officer is. We don’t know if he has all the past records for the last 20 or 30 years. We don’t know what help he receives. How is this improvement? »
He added that reopening cases beyond three years and up to ten years is a regressive amendment and ” defeats the purpose for which you reduced the time limit to three years “.
Worried about the economic impact of the Russian invasion of Ukraine, he said: “Supply chains have been stifled. Shipping rates have increased astronomically. There is a shortage of chips. There is a shortage of containers. There is a credit crunch. World trade will be affected. In fact, the IMF estimated that each country’s GDP would decline by 0.5% to 2%.
“Given all these developments over the past eight weeks, are you (the finance minister) still confident that your nominal GDP will indeed grow by 11.2% (in 2022-23)… I wish no harm. I want growth of 11.2%. But I have serious reservations that under the new circumstances in the year starting April 1 it will actually increase by 11.2%,” he added.
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