Finance Bill, 2021Settlement Commission Abolishing Settlement Commission

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The Tax Publishers Finance Bill, 2021--Settlement Commission Abolishing Settlement Commission CA. Manoj Gupta The Finance Bill, 2021 proposes to do away with the Settlement Commission. The learned author discusses the relevant amendments. 1. Background of introduction of Settlement Commission under Chapter XIX-A Tax and tax evasion both go together and almost parallel. The savings made by way of evading tax is usually spent on sheer wasteful expenditures. Thus, whenever a tax evader is caught, he is not in a position to pay the taxes, penalties, etc., imposed upon him. Therefore a large amount remains outstanding to the revenue and has to be written off because of non-ability of tax evader to make payments. Consequently, a committee of experts in the name of Wanchoo Committee headed by justice Shri K.N. Wanchoo was appointed to suggest legal and administrative measures for countering evasion and avoidance of direct taxes. This led to creation of what is known as Settlement Commission. The committee reported its finding to the government first by interim report and then by final report. The reports inter alia analysed the problem of black money, tax evasion and tax avoidance. It reported that black money generally denotes unaccounted money or concealed income and/or undisclosed wealth as well as money involved in transactions wholly or partly suppressed the existence and flow of black money operated as a totally separate, strongly, co-existent, and aptly competing parallel economy. The effects of black money on the official economy of the country was described to be disastrous black money and tax evasion seriously sap the foundations of the equity concept of taxation and reduce its impact. Together, they have the effect of shifting greater burden on the honest taxpayer and result in economic disorders in the form of inequality in distribution of total wealth of the economy and concentration of wealth in the hands of a few in the country. The Wanchoo Committee thought of two thingsOne, a scheme of voluntary disclosure, and the other, a statutory settlement machinery. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Finance Bill, 2021--Settlement Commission

Abolishing Settlement Commission

CA. Manoj Gupta

The Finance Bill, 2021 proposes to do away with the Settlement Commission. The learned author discusses the relevant amendments.

1. Background of introduction of Settlement Commission under Chapter XIX-A

Tax and tax evasion both go together and almost parallel. The savings made by way of evading tax is usually spent on sheer wasteful expenditures. Thus, whenever a tax evader is caught, he is not in a position to pay the taxes, penalties, etc., imposed upon him. Therefore a large amount remains outstanding to the revenue and has to be written off because of non-ability of tax evader to make payments. Consequently, a committee of experts in the name of Wanchoo Committee headed by justice Shri K.N. Wanchoo was appointed to suggest legal and administrative measures for countering evasion and avoidance of direct taxes. This led to creation of what is known as Settlement Commission.

The committee reported its finding to the government first by interim report and then by final report. The reports inter alia analysed the problem of black money, tax evasion and tax avoidance. It reported that black money generally denotes unaccounted money or concealed income and/or undisclosed wealth as well as money involved in transactions wholly or partly suppressed the existence and flow of black money operated as a totally separate, strongly, co-existent, and aptly competing parallel economy. The effects of black money on the official economy of the country was described to be disastrous black money and tax evasion seriously sap the foundations of the equity concept of taxation and reduce its impact. Together, they have the effect of shifting greater burden on the honest taxpayer and result in economic disorders in the form of inequality in distribution of total wealth of the economy and concentration of wealth in the hands of a few in the country.

The Wanchoo Committee thought of two thingsOne, a scheme of voluntary disclosure, and the other, a statutory settlement machinery.