India’s move towards transaction based Direct Tax – #UnionBudget 2023

TaxReco Shorts

Government of India is moving towards making direct tax applicable on each transaction to avoid leakages through cross assessment, standardizing data and gradually moving towards unified returns.

Cues which can be taken from recent budget

  1. Permanent Account Number (PAN) will be used as Common business identifier across all digital systems of all specified departments of the government. Once implemented, it shall standardize the data for companies and ease compliance burden
  2. The government has hiked TCS, from 5% to 20%, on overseas tour packages by modifying Section 206 of IT Act, 1961. This can be considered as a measure to reinforce cross assessment of tax

With standardized data across platforms, adoption of tax technology can be much easier for companies. With tax technology in place, companies can ensure not to miss deducting tax on any transaction.

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