Recent proposals suggest that taxpayers often hesitate to report higher incomes, fearing increased scrutiny and additional tax demands. This “every return is suspicious” environment restricts voluntary compliance. At the same time, it remains vital to maintain rigorous checks on those who deliberately exploit legal loopholes. By shifting to a more balanced, risk-based, and data-driven scrutiny system rather than blanket assessments, authorities can encourage honest disclosures and reassure taxpayers that genuine errors will not lead to harsh penalties—even as willful evasion is tackled firmly.
One set of recommendations aims to bring more individuals into the tax net by making PAN mandatory for property transactions above ₹1 lakh, reducing the TDS threshold for real estate sales from ₹50 lakh to ₹1 lakh, and requiring PAN during building plan approvals above 500 sq. ft. While linking major transactions directly to tax authorities could strengthen oversight, significantly lowering thresholds might flood the system with minor transactions and renovations, creating unnecessary bureaucratic hurdles for law-abiding taxpayers. Effective data-processing infrastructure would be crucial to ensure real benefits in transparency without overwhelming genuine filers.
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In an effort to crack down on unreported deals, it has been proposed that any real estate transaction over ₹50,000 be conducted exclusively via digital means. Such a move could deter cash-based dealings and make high-value transfers easier to track. Nonetheless, some observers argue that a ₹50,000 cutoff is too low, particularly in regions lacking robust digital infrastructure. A phased rollout or transitional measures could prevent unintended burdens on smaller transactions while ensuring more significant evasions are addressed.
Certain proposals call for imposing strict 30-day deadlines on rectification petitions, condonation petitions, and revisional orders, aligning these with the payment deadlines that taxpayers already face. Expedited decision-making could spare taxpayers the financial and emotional strain of paying disputed amounts or accruing interest while awaiting outcomes. However, without sufficient staffing, specialized training, and robust digital support, these deadlines could transform into new administrative hurdles instead of effectively streamlining the process.
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Among various reform ideas, raising the basic exemption limit to ₹5 lakh (with higher thresholds for senior citizens) could alleviate compliance burdens for lower-income groups, though it may reduce total tax collections unless other revenue sources are strengthened.
Additionally, the 20% TCS on foreign travel has been labeled disproportionate, as it appears to penalize travelers rather than functioning as an effective monitoring tool. Some commentators also advocate standardizing Presumptive Taxation (Sections 44AD, 44ADA, 44AE), including lower percentages for digital receipts, to encourage cashless transactions.
Recent recommendations focus on eliminating the need for manual filings in e-appeals and improving the e-proceedings portal to sort notices by assessment year and highlight new notices first. A robust mail-tracking system would also confirm receipt of notices and taxpayer responses. While digital platforms offer a promising route toward efficiency, short response windows and repetitive demands have caused frustration. In some instances, irrelevant queries highlight data-sharing gaps within the system, pointing to a clear need for greater interdepartmental coordination and staff training.
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One particularly bold suggestion involves compensating taxpayers who successfully overturn flawed or overly aggressive assessments at a rate equal to the original demand—aimed at alleviating both the mental and financial burdens of disputing such claims. Critics warn this could spur a spike in compensation requests, potentially overloading the system with added litigation. A more measured approach, such as partial or structured compensation, may help balance the need to protect taxpayers from unjust demands against the possibility of frivolous claims.
Proposals also emphasize stricter oversight of Form 60/61 submissions, potentially linked to Aadhaar or other identifiers, alongside stronger supervision at banks and financial institutions to ensure accurate submissions. Achieving tangible results requires advanced data-sharing mechanisms and a modern IT ecosystem. A centralized, well-maintained repository would help reconcile multiple Form 60/61 entries, prevent redundant filings, and identify potential noncompliance.
Mr. Vivek Jalan, Partner Tax Connect Advisory Services LLP – a multidisciplinary PAN India Consulting Firm gave the following suggestions prior to the Budget 2025.
Personal Tax :
Scrapping of the Old Regime totally and rationalising the Income Tax slabs under the new regime – It is a fact that today under the new tax regime, Income Tax has become simpler. Further an exemption of Rs.7 Lakhs means that taxpayers have to pay NIL tax on the same level of Income where they were earlier paying tax. Hence, the Government should consider and make the new regime as the only regime as the Income Tax Act goes for a comprehensive review on 1st Feb 2025.
However, they must also consider easing out the tax rate in the new regime considering the Cost of Inflation of approx. 6% pa and the impact on the present value of money.
It is thus expected that the basis exemption/ rebate be extended to Rs.9 Lakhs for putting in more money in the hands of the middle class. Further, for the established taxpayers with an income of over Rs.15 Lakhs, transition to the new scheme would involve a financial hit. It is expected that the Government would also compensate them. Hence there may be a new slab in the new regime of say Rs.15 Lakhs – Rs.18 Lakhs with a tax rate of 25%.
This would mean more disposable income in the hands of people and a push to consumption which would consequently push the GDP of the Country.
Corporate Tax :
Substantially revamping complex, multiple and redundant TDS provisions leading to confusion and litigation for taxpayers. Also, percentage of deduction in some cases is prohibitive – As of now there are 71 Sections under TDS/TCS; Rates of TDS/TCS is still high inspite of rationalisation in last budget; Also there is overlap between TCS and TDS provisions.
A complete overhaul of TDS/TCS provisions have been represented and is expected in Union Budget 2025 as a part of “Substantially revamping of Income Tax Act” as announced by FM in her last budget speech. It is expected that there may be a single comprehensive Schedule of Rates of TDS (just Like the Customs Tariff Act) with Schedule Notes.
Issuance of TDS/TCS certificates may be withdrawn for Ease of compliances, which will help more than 10 Lakh tax-deductors and Taxpayers. Ease of compliances will certainly help bring improve organised sector.
Overall, a host of potential reforms—ranging from tighter real estate scrutiny to streamlined appellate timelines and revised tax rates—could redefine how direct taxes are administered. Striking the right balance between encouraging honest taxpayers and deterring evasive practices remains the core challenge. Future success will hinge on rolling out cohesive policies supported by trained personnel and upgraded technology, laying the groundwork for a fairer, more transparent tax landscape that also keeps the revenue collection buoyant in the years ahead.
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