The past year has been an eventful one across economies and industries, but we look to the future with optimism and some very specific expectations for the telecom sector. We hope that the GAAR (general anti-avoidance rule) provisions, which are expected to be introduced from 1 April, 2017 onwards, are made effective prospectively for the agreements executed on or after the effective date. Furthermore, the rules for making them applicable should be objective, easy to comprehend and implement. This will definitely help avoid several wo/man hours on litigations in the future.
With the expected increase in tax collections due to demonetisation of ₹500 and ₹1000 currency notes, we are looking forward to a reduction in the rate of corporate tax and the abolition of all the surcharges/cess, etc. This is in line with the Hon'ble Finance Minister's promise in his budget speech in 2016. Additionally, we expect a write-off of loans and advances as deduction from taxable income at par with bad debts.
Considering that most of the new world economy thrives from new developments in technology, incentivised deductions for R&D should be extended to the telecom/service industry.
There should also be no disallowance of expenses under section 14A, considering that dividend income suffers Dividend Distribution Tax. This has also been suggested by the Easwar Committee in their report on simplification of income tax laws, and it would definitely be in the interests of enterprises across the board if it were to be considered.
Presently, there is an incentivised deduction for R&D expenses for manufacturing organisations. Considering that most of the new world economy thrives from new developments in technology, the incentivised deductions should be considered to be extended to the telecom/service industry. With increased consumption of data services in areas such as the internet of things, big data, and artificial intelligence, telecom companies are required to invest in R&D in new technologies to remain relevant at the very least.
We are also looking forward to an increase in the number of benches for Advance Rulings, which would help the taxpayers get tax certainty expeditiously, thus increasing the ease of doing business.
The law should also make it clear that no tax needs to be deducted at source from the periodical provisions made in the books, which is reversed on the first day following the period. TDS credit is to be granted as per 26AS, irrespective of the year in which the income has been offered for tax. The taxpayer should be permitted to prefer any new claim during the assessment proceedings, which could not be so claimed in the return, since ultimately the Constitution also mandates collection of tax that is due only on real income.
The provisions relating to the prosecution of senior executives of companies should be made inapplicable in the absence of any willful attempt on their part to avoid TDS payments and where there is a suo moto compliance of TDS provisions. Similarly, there should be appropriate provision for granting TDS credit, based on valid TDS certificates as claimed in the return, even if the credit does not reflect in the 26AS website.
Lastly, with a view to bring accountability to the department, in the matter of expeditious grant of refund, interest should be made payable on the entire refund, including interest on refunds delayed beyond 180 days.