Old Demonetised Notes (ODN) for payment of taxes- time allowed is very short must be extended to 30th December, 2016

[CA DEV KUMAR KOTHARI]

News reports and circulars:

As per news and e-information available on different sources Government has allowed payment of central , state and local taxes by old demonetized notes  (ODN) of ₹ 500/- and ₹ 1000/-  However, time allowed is only up to midnight of 11.11.2016.

The time allowed is very short:

Time allowed is very short for use of Old Demonetised Notes (ODN) for payment of taxes because before a payment is made towards such taxes, one has to ascertain liability, desirability of payment against disputed dues, advance payment etc. One has also to arrange funds. This can be in form of own funds kept at different places or someone else making payment on behalf of other.

There are long ques for making payments through Old Demonetised Notes (ODN), and such ques will be lengthened once this news is known to more people.

Therefore, for such payments more time should be allowed. When time allowed for exchange and deposit of such notes is up to 30.12.16, the same period should also be allowed for payment of taxes.

Extended time will also be beneficial for revenue:

Extended time for payment of taxes will also be beneficial for revenue. This can lead to collection of taxes which would not be collected immediately otherwise. For example, suppose there is a disputed demand of tax of ₹ 100 K, it has been stayed on payment of ₹ 15K, balance due is ₹ 85K. This balance may not be collected for a period of at least 18-24 months, that too if appeals are decided expeditiously. There is also scope of further appeal and there can be more delay. Therefore, if government allows more time, to pay such taxes it is likely that people will prefer to pay such seriously disputed tax also 

 Tax under section 115BBE may be allowed with clarification and assurance:

As is recognized by government, Old Demonetised Notes (ODN) were used as a store for holding undeclared income. Cases where a person hold Old Demonetised Notes (ODN) out of his legitimately accumulated surplus from legitimately earned income, capital receipts, past savings etc. but is unable to prove source of such income, or capital receipts and do not want that people from whom he received such money should face difficulty must be liberally allowed to pay tax U/s 115BBE of the Income-tax Act, 1961 to remove defect and default to make such money defect less.

 People who hold Old Demonetised Notes (ODN) legitimately must be allowed to pay tax u/s 115BBE and relax forever:

People who hold Old Demonetised Notes (ODN) out of legitimately accumulated surplus from past saving, income, capital receipts etc. must be liberally allowed to pay tax u/s 115BBE , without limit and remain relaxed and fearless from tax authorities.

Who can be allowed to pay tax u/s 115BBE and relax:

Any person or organization who has no record of engagement in any illicit business, or criminal record and is also not in capacity of earning  ill-gotten money  by way of bribes, banned  business, crimes etc. must be allowed to pay tax u/s 115BBE and relax.

Win-win situation for government and public:

If government allows tax u/s 115BBE, and ensure trouble free life to such taxpayers, it will be win-win situation for government and taxpayers both. This will also ensure irregular money coming into main stream of our economy.

In view of ground reality that people hold hard earned money in form of  Old Demonetised Notes (ODN) which is just irregular due to non-payment of tax. The reason for such holding of Old Demonetised Notes (ODN) is also higher rate of tax, and very likely harassment by tax authorities.

Reasonable rate of tax must be considered in view of capital base of tax payer, efforts required in earning of income including efforts required to become capable for earning. If we consider these aspects, even 10-15% rate of tax is higher for a person newly engaged in any business, profession, trade or calling. For example, a doctor who spends about 30 years of his life in education (up to MS/ MD), has no capital base, finds even tax @ 15% as higher. So there must be a consideration for such aspects and people must be allowed to build a capital base in monetary form also.

********************* Circulars and new reports with highlights.

Old demonetised 500 & 1000 rupee notes will be accepted for making payments towards fees, charges, taxes and penalties payable to the Central and State Governments including Municipal and local bodies;This facility available only till midnight of 11th November, 2016

The Central Government has taken a decision that old 500 & 1000 rupee notes will be accepted for making payments towards fees, charges, taxes and penalties payable to the Central and State Governments including Municipal and Local Bodies. Such old notes will also be accepted for making payment of utility charges for water & electricity etc. However, these facilities will be available only till midnight of 11th November, 2016.

http://economictimes.indiatimes.com/news/politics-and-nation/rs-500-rs-1000-notes-can-be-used-for-paying-power-bills-tax-till-tomorrow/articleshow/55351541.cms

₹ 500, ₹ 1,000 notes can be used for paying power bills, tax till tomorrow

By PTI | Updated: Nov 10, 2016, 05.43 PM IS

Read more at:
http://economictimes.indiatimes.com/articleshow/55351541.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

NEW DELHI: Giving some more relief to common man, the Centre today said old ₹ 500 and ₹ 1,000 notes can be used to pay utility bills, taxes, penalty and fees to central and state governments till midnight of November 11.

While demonetising the high-value currency notes on Tuesday, the government had permitted people to use such notes for payment of certain services like rail and metro ticket, rail catering, airline ticket, buying LPG cylinder and medicines with doctor's prescri ..

Economic Affairs Secretary Shaktikanta Das today tweeted: "Old 500, ₹ 1000 notes to be accepted for payment of fees, charges, taxes, penalty to central and state governments, including municipalities and local bodies."

Old 500 & 1000 notes to be accepted for payment of fees,charges,taxes,penalty to Central & State govts including municipalities,local bodies

- Shaktikanta Das (@DasShaktikanta) Novembe ..

http://www.livemint.com/Politics/ka9CtDCHSLqZQ0GkX5zO4M/Rs500-Rs1000-notes-can-be-used-for-paying-utility-bills-ta.html

Last Modified: Thu, Nov 10 2016. 07 17 PM IST

Earlier, the govt had permitted people to use such notes for payment of certain services like rail, metro ticket, airline ticket, buying LPG cylinder and medicines with doctor’s prescription. Photo: Pradeep Gaur/Mint

New Delhi: Giving some more relief to common man, the Centre on Thursday said old ₹ 500 and ₹ 1,000 notes can be used to pay utility bills, taxes, penalty and fees to central and state governments till midnight of 11 November.

While demonetising the high-value currency notes on Tuesday, the government had permitted people to use such notes for payment of certain services like rail and metro ticket, rail catering, airline ticket, buying LPG cylinder and medicines with doctor’s prescription.

Economic affairs secretary Shaktikanta Das today tweeted: “Old 500, ₹ 1000 notes to be accepted for payment of fees, charges, taxes, penalty to central and state governments, including municipalities and local bodies.”

Such old notes to be accepted for payment of utility charges like water and electricity, he said.

“Above facilities to be available till 11 November midnight. Records to be maintained,” Das tweeted.

Exemptions have also been made for payments at government hospitals, milk booths, crematoria/burial grounds and petrol pumps till 11 November. People having invalid notes are required to either deposit them in their accounts or exchange them with new currency notes. Banks have already started issuing new currency notes of ₹ 500 and ₹ 2,000 denominations.