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Record GST mop-up to removing retro tax law

A record GST tax collection, an overhaul of the income tax return filing portal and the landmark move to scrap the retrospective taxation have set the stage for the next level of reforms in the tax administration that include bringing a framework for cryptocurrencies and rationalising the GST rate structure.

With tax reforms such as faceless assessment taking roots, 2021 will go down as the year that pivoted the tax administration in a country aspiring to become the world's favourite investment destination.

The task ahead is going to be a tough one as the tax department would grapple with taxing cryptocurrencies, rationalising Goods and Services Tax (GST) rates to shore up revenues and post June 2022, the scenario of how the GST revenue plays out for states without the Centre's support of compensation.

In a historic decision, the government in August scrapped the retrospective amendment on indirect transfers for transactions prior to May 28, 2012.

To bring tax certainty, the new rule provides that no retrospective tax demand shall be raised in the future, and demand raised already shall be nullified on fulfilment of certain conditions. The amount already paid/collected shall be refunded, without any interest on fulfilment of the said conditions.

Almost all of the 17 companies, including Cairn and Vodafone, which were entangled in a dispute with the government over the retro tax law have approached the revenue department to withdraw and settle the cases.

In its endeavour to simplify processes for taxpayers, the revenue department unveiled a new income tax e-filing portal in June. However, the portal suffered technical snags and stakeholders complained about the non-availability of many functionalities.

The revenue department had to extend the I-T return filing date for individual taxpayers till December 31 from July 31, and also relaxed many other compliance deadlines.

Over a period of time, these glitches have come down to some extent and as of December 15, 2021, 3.59 crore Income Tax Returns (ITRs) have been filed through the new e-filing portal.

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