The CEO of Dhruva Advisors claims that lower TDS rates can save taxpayers money on compliance expenses.
Dhruva Advisors CEO Dinesh Kanabar discusses reforms, tax-related measures anticipated in the budget, and more. Taxpayers’ need for some

Dhruva Advisors CEO Dinesh Kanabar discusses reforms, tax-related measures anticipated in the budget, and more.
Taxpayers’ need for some relief is growing, and there is a lot of conjecture on possible changes to the tax system as the budget is scheduled to be revealed in February. The CEO of the professional services company Dhruva Advisors, Dinesh Kanabar, discusses what must be done, how taxes may be made simpler, and how the burden of compliance can be reduced. Edited sections:
What are the main topics that the government ought to cover in this year’s budget from a tax perspective?
There will be high expectations for direct taxes when the finance minister announces the 2025–2026 budget. This is especially pertinent since she made it clear in last year’s Budget that the government’s top priority was to simplify tax legislation.
A number of adjustments were made in the budget to streamline the capital gains tax system. Following this, businesses, taxpayers, professional associations, and chambers of commerce were asked for their thoughts on how to simplify the tax legislation. More than 1,000 presentations have been received since, indicating a variety of modifications. It would be fascinating to see how many of these are postponed for later implementation and how many are included in the next budget.
Which crucial areas require attention when it comes to modifications to the Income Tax Act?
Three main goals stand out: addressing escalating litigation, simplifying the law to provide taxpayers clarity, and making compliance easier to reduce rising compliance costs. These are essential for fostering confidence between the revenue agency and taxpayers.
What is actually possible in terms of simplifying laws?
The tax rules have grown complicated over time, including provisos, clarifications, and sub-sections in every part. Furthermore, a number of parts’ draughting leaves much room for interpretation, leaving the legislation open to different interpretations. The truth is that there is uncertainty over interpretation since various officers may have different interpretations of the law.
Taxpayers seek certainty of obligation yet would prefer a higher tax rate. This turns into a significant problem, particularly with regard to international investment. It is obvious that any effort to make the legal language simpler is a positive step. The decision of taxpayers to prefer a more certain tax system rather than one with no deductions or exemptions is easy to comprehend. I anticipate that the government will provide people with more incentives to choose the new tax structure.
The complexity of the tax lawsuit problem has only increased.
Litigation related to taxes is not new and occurs annually. However, because of the increasing backlog at the appellate level, it has now gained more importance. Taxpayers now have to pay 20% of the demand while appeals are underway due to significant increases made during assessments. They consider the upfront payment to be a significant financial burden since they feel that these expectations are unfair. Nevertheless, both parties are unhappy if the revenue misses out on the remaining 80% in the event that the lawsuit is successful.
It is required to examine several approaches in order to handle this. The Dispute Resolution Panel (DRP) may be able to handle a greater percentage of cases, while the Income Tax Appellate Tribunal (ITAT) may be permitted to handle cases with higher stakes directly.
How do you feel about the length of time it takes to settle tax disputes?
It frequently takes 12 to 15 years for a tax case to be decided by the Supreme Court. Taxpayers face difficulties as a result of these delays, including contingent obligations that affect IPOs and company values. Implementing a settlement plan that would allow taxpayers to bargain and resolve conflicts with tax officials would be a workable approach. This will prevent protracted legal action.
For non-resident taxpayers, the revival of the Authority for Advance Rulings (AAR) is imperative. Providing certainty to non-residents is essential if India wants to attract significant foreign investment.
The Authority for Advance Rulings (AAR) must be revived for non-resident taxpayers. If India hopes to draw large amounts of foreign investment, it must provide non-residents assurance.
How do you see the difficulties associated with compliance?
There are a number of factors that require consideration. One that has increased to as much as 20% is tax collected at source (TCS). It brings up an important point: is TCS really required? Even if the purpose of TCS is to keep an eye on transactions, taxpayers who are already subject to GST shouldn’t have to pay an extra burden.
Another major issue with tax deducted at source (TDS) is its complexity and the administrative strain it places on those who are withholding taxes. Taxpayers’ compliance expenses might be significantly decreased by rationalising TDS rates to just a few slabs. Being sued only because the tax officer feels that the rate of withholding should have been greater under a different provision is a waste of time and money for those who are deducting tax at the source.
And lastly, the question of responsibility. The tax office’s extensive additions, which are eventually overturned in appeals, have a detrimental effect. There must be a system in place to keep an eye on the additions, and I sincerely hope that the budget includes allowances for this.