MEDIA has played a very important role in shaping public opinion in India. It is therefore important that news and views expressed in the media be objective and free from bias. Veteran journalists and columnists are expected to do thorough research before expressing their opinion on subjects of importance. It is in this connection that I refer to a column in the Indian Express by Ms. Tavleen Singh wherein she has, in the context of the government's drive to expand the tax base, made disparaging remarks about the working of almost the entire tax Department. It is necessary that the readers are aware of the actual state of affairs and do not get swayed by the unsubstantiated statements made by the senior journalist. It is with this end in view that I shot off a letter to the editor of Indian Express and I share the same with you.
"I am an old and avid reader of Indian Express for 40 years and more. Over the years I have also learnt to ignore Ms Tavleen Singh's opinion pieces every Sunday as these are so utterly biased, one-sided, unbalanced and self-opinionated as to, more often than not, militate against my sense of decency. However this Sunday her piece was titled 'Ending tax terrorism' and as a former tax officer who spent a decade in setting up and automating taxpayer services in Income Tax department, I could not resist the temptation of reading it. True to the type it turned out to be as biased and misguided and factually incorrect as ever. While I fully concede the right of highly strung journalists to pontificate on any and every subject under the sun without taking the trouble to find facts (you see my son is also a journo- albeit of TV variety) still a few of the false statements of facts that she makes cannot be allowed to go unchallenged. Since the so-called 'tax terrorists' sitting in North Block are unlikely to take cudgels with her even on such elementary facts, what with her avowed direct access to the Honourable Finance Minister with whom, she makes it a point to show that, she is on first name basis, let me point out some of these wrong statements.
She has stated that the Form of return of income is a Kafkaesque document running into 30 pages. Let's check out facts. Actually ITR-1 (Sahaj) and ITR-4S (Sugam) which are used by about 65% of taxpayers are of 2-3 pages. Only ITR-4 and ITR-6 meant for high income professionals and Corporates who are required to get their accounts audited, are of 30 pages. None of these returns require any additional documents to be attached. Of the 2.96 crore returns filed In F.Y.13-14 as many as 1.74 crore were on ITR-1 or 4S. These returns require less than ten columns to be filled in, apart from identity particulars. And mind you, no other document of any type whatsoever is to be attached to any income tax returns.
She says that if she were an American citizen, she would fill a two-page form, and if she were British, the form would be slightly longer but so simple that even semi-literate Indians could fill it easily. Again let us examine the facts. In the US individuals are required to file returns of income in Form 1040 which is really of 3 pages. The Instructions sheet for filling this 'simple' form runs into 102 pages. Then this 'simple' return is to be supported by attaching Schedules A to H, J, R, SE and Forms 2106, 2210, 2441, 2848, 3903, 4868, 4952, 5329, 8283, 8582, 8606,8949 and 8812. Exact details of these Schedules and forms are available at http://www.irs.gov/uac/Forms-and-Schedules-for-Form-1040. The U.S. Corporation Income Tax Return is to be submitted in Form 1120. Again this is only a 5 page document but instructions for filling it run into 25 pages. It is to be supported with Schedules D, N, O, and Forms 4626, 8050, 1125-A, 4136,8941, 3800 besides others, details of which are at http://www.irs.gov/pub/irs-pdf/i1120.pdf. Each of these Schedules and Forms are extensive documents in themselves. So kindly don't remind us of Kafka or at least do so after doing your homework. Should I also deal with the UK form which she admits to be slightly longer though within the mental abilities of 'semi-literate Indians'? Let me not burden this small piece with those details and assure her that these are equally arduous if not more.
Next she talks of Wealth tax return. She might not be knowing but Wealth tax stands practically abolished in India and does not apply to assets except open urban land, jewellery, and some luxury items like yachts etc. The total all-India collection from Wealth tax over last several years has remained under Rs 1000 crore, which means that total disclosed wealth across India subject to Wealth Tax is of the order of Rs 100,000 crore. Almost all Indians except a handful of former royalty, heiresses and owners of uber-luxury items do not come under Wealth tax. She says that size, shape, colour, weight and worth of every item of jewellery is to be given. Please check facts. The return requires only the weight, value and precious/ semi-precious nature of the jewel based on valuation report. But I agree that why bother even this small number of Indians for collecting a pittance of less than Rs 1000 crore.
She next says that small shopkeepers, traders and businessmen remain outside the tax net because none of them can afford the time and money required to file income tax returns. This category comes under the presumptive tax regime. The relevant return form is of three pages and can be filed online. The Income Tax department provides services of online payment of taxes, Tax Return Preparers, and online filing of returns. Annual report of Finance Ministry would have shown her that over 85% of all income tax payments (over Rs 6 lakh crore) are being paid online. All taxpayers can also access their pre-paid tax account (Form 26AS) via their net banking account with any bank or by simply registering with TRACES site. By the way TRACES has recorded 9.46 crore hits as of 15th June 2014 due to all these taxpayers accessing their tax accounts. Even a casual visit to e-filing site of Income Tax department would have shown that the number of small filers filing online (ITR-1 and 4S) has increased by 33% and 39% respectively over the preceding year. This site boasts of having received 1682456 online returns on a single day on 31st July 2014, which must be a world record. Online payment and filing does not require either a visit to income tax office or to the Inspectors that she so detests only because they are appointed as such. These sources would have also shown her that all e-filed returns are being processed online at Central Processing Centre, Bengaluru, without intervention of tax offices and nearly 98% of all tax refunds are being paid by State Bank of India under the Refund Banker Scheme directly to taxpayers either by direct deposit to their bank account or by cheques delivered to them as per their options. In other words, nearly 85% of taxpayers are not visiting any Income tax offices for making their normal tax compliances or seeking refunds. Therefore, her entire claim that small businessmen remain outside the tax net because they can't afford the time and money to file tax returns, is baseless. There are multifarious other reasons for that.
Next she says that the Tax Department 'widens the net' by conducting raids on movie stars and big businessmen assuming they will definitely find undeclared wealth in their homes. She goes on to allege that victims are treated as guilty till they can prove their innocence, and the main beneficiary is not government but those who make up the raiding parties. This is again a typically lazy, biased and generalised statement. Searches are conducted for unearthing tax frauds and not for widening tax net. And not because officials are fond of these but because Parliament in its wisdom requires these to be carried out in appropriate cases and with appropriate safeguards, which are all subject to scrutiny by Courts. These officials are answerable to Parliamentary oversight through the Minister, besides C&AG & PAC and the vigilance mechanism of CVOs, CBI and CVC. Annual Report of Union Ministry of Finance for F.Y. 12-13 shows that in F.Y. 11-12, 5260 searches led to recovery of Rs 960 crores of assets and admission of concealed income of Rupees 14017 crore. Widening of tax net is carried out mostly by non-intrusive methods of collecting intelligence online through Annual Information Returns of high value financial transactions filed by third party agencies like banks, credit card companies, registrars of immovable properties, and online identity-blind matching of these with the tax returns. The last Annual Report of Union Ministry of Finance for F.Y. 12-13 shows that the Annual Information Returns filed for F.Y. 11-12 reported information of 52,65,022 high value transactions aggregating to a staggering Rs 93,18,498 crore.
I do not for a moment deny existence of corruption in Income tax department in the same way in which I cannot deny its existence in other departments or indeed outside Government and in journalism itself. But then people manning Income Tax department do not come from any different section of the society than the rest of Indians. I also do not claim that nothing more can be done by way of simplification or automation of tax processes. But I do take some pride in saying that the steps taken in introducing e-governance in Indian Income Tax department over past many years, some of which I have referred to above, have significantly reduced opportunities of corrupt actions- particularly in issue of PAN cards and refunds, while boosting tax collections. It is sad that even responsible sections of media prefer not to take note of these because it is much easier (and lazy) to make general across-the-board accusations against all and sundry. And what better and softer target to establish your credential than to accuse Tax officers and Inspectors? But remember that every time you tar the entire department with the same black brush you also undermine the few who are manfully fighting the system from inside to improve it. By calling tax officers as 'tax terrorists' you demoralize officers on the one hand and dilute the severity of the crime of terrorism on the other."
Source:- www.taxindiaonline.com....Article by Sri By S S Khan, Former Member, CBDT
Source:- www.taxindiaonline.com....Article by Sri By S S Khan, Former Member, CBDT
