From Our Special Correspondent
NEW DELHI, Feb 12: Shillong MP Ricky Andrew J. Syngkon on Thursday met Union Finance Minister, Nirmala Sitharaman and urged her to reconsider the CBDT Notification of 2021, which introduced a monetary threshold of Rs 20 lakh for interest income even in tribal areas leading to a restrictive interpretation of the substantive exemption available under Section 10(26) to tribals in Sixth Schedule states.
“In several cases, this has resulted in denial of legitimate refund claims of Scheduled Tribe assesses and avoidable litigation, despite the absence of any such ceiling in the parent statute,” Syngkon said.
He also urged the Minister to consider introducing a simple self-declaration mechanism on the Income-tax Department, on the lines of Form 15H available to non-tribal or general assesses, for eligible Scheduled Tribe taxpayers and taxpayer burden, particularly in the northeastern region.
In a letter submitted to the Union Minister, Syngkon said that that under Section 10(26) of the Income-tax Act, 1961, there are provisions for tax exemption to members of Scheduled Tribes residing in the Scheduled Areas and specified Scheduled States, particularly in the North Eastern region. The Tribal Areas are specified in Part I and Part II of the Sixth Schedule to the Constitution (as applicable to Assam, Meghalaya, Tripura and Mizoram); and the States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura, as expressly provided in the statutory language.
Section 10(26) of the Act clearly exempts “any income” accruing or arising to a member of a Scheduled Tribe from any source in the aforesaid Scheduled Areas or Scheduled States, or by way of dividend or interest on securities, the letter pointed out., it said. The provision, as enacted by Parliament, does not prescribe any monetary ceiling or quantitative limitation on the exemption, nor does it envisage differential treatment based on the quantum or nature of such income, so long as the statutory conditions relating to Scheduled Tribe status and place of residence are fulfilled, it added.
But the recent implementation of the CBDT Notification has given rise to unintended hardship for Scheduled Tribe taxpayers, the MP said.
“While the notification was intended to provide relief from deduction of tax at source under Section 194A, the introduction of a monetary threshold of 20 lakh for interest income has, in practice, led to a restrictive interpretation of the substantive exemption available under Section 10(26),” he said.
In several cases, this has resulted in denial of legitimate refund claims of Scheduled Tribe assesses and avoidable litigation, despite the absence of any such ceiling in the parent statute, he said. To buttress his claim, the MP drew attention to the reply given by the Ministry of Finance in Parliament which categorically stated that there is no requirement of any certificate to claim exemption under Section 10(26) of the Act.
“Notwithstanding this clarification, it is observed that inconsistent practices continue at the level of employers and deductors, including insistence on annual certificates or additional documentation from Scheduled Tribe employees, thereby imposing an unnecessary procedural burden,” the letter said. It also urged the Minister to ensure that implementation of delegated legislation and administrative instructions remains fully aligned with the legislative intent of Parliament and the constitutional safeguards extended to Scheduled Tribes residing in Scheduled Areas and Scheduled States.
“Clarificatory guidelines or appropriate administrative measures may be considered to remove ambiguity, prevent restrictive interpretations, and ensure uniform application of the exemption across jurisdictions,” the VPP MP said.
Further simplification of tax returns should be done to enable direct declaration by the assesses, ensure uniform compliance, and obviate the need for repeated intervention at the level of employers or deductors, thereby easing both administrative and taxpayer burden, particularly in the northeastern region, he added.
