New I-T returns forms a lot saner but FM has overlooked some important issues
If persons with only salary income and interest from savings bank up to Rs 10,000 are exempted from filing returns, the system would to that extent be cleansed of clutter
The CBDT officials committed an excess by asking all and sundry to disclose the details of their foreign travels and also the balance as on 31 March 2015 in all the bank accounts held when it launched the return forms for assessment year 2015-16 on 15 April 2015.
It has now done well (though at the behest of Finance Minister Jaitley) to redeem itself partially. Now, those who have travelled abroad during 2014-15 need to disclose only the passport number. And as far as bank accounts are concerned, only identification figures like IFSC code need to be disclosed and even this bare minimum disclosure is not required when an account has been dormant for three years.
One wonders what could be the rationale behind this. Dormant accounts, in fact, could be revealing as often money launderers leave them alone once their missions are accomplished. It is for the RBI and tax authorities to install software that can throw up abnormalities in transactions and operation of accounts instead of asking the income tax payers to do their job. Be that as it may.
Jaitley should have addressed other issues as well. Ideally, income tax authorities must follow the time-honoured management tenet by exception. Extended to assessment of income, this tenet should tell the administration not to seek the same information over and over again.
Every employer files a quarterly as well as annual return of details of employees’ salary from which he has deducted tax at source. There is no point in asking the individual employees as well to file their own returns even if the purpose is to make sure that the one filed by the employer and the one by the employee are not at odds with each other but instead corroborate each other because every employee waits for the Form 16 given by the employer and does not deviate a wee bit from what the employer has told.
The point is if persons with only salary income, on which tax has been deducted at source by the employer, and interest from savings bank up to Rs 10,000 which is tax-free are exempted from filing returns, the system would to that extent be cleansed of clutter. What is more tax officials can turn their guns on tax evaders.
Secondly, those filing the return have been asked by the CBDT to look over their shoulder with trepidation - AS 26. This statement, to be sure, is available online and to that extent can be accessed with a click of a mouse. But convenient access is always not a comforting factor. For often AS-26, the department’s account of tax already paid by the taxpayers contains a shocker or two.
The taxpayer’s record of tax payments and the department’s record - AS-26 - may differ for the following reasons:
i) The deductor may be blithely sitting on the money like Kingfisher Airlines;
ii) The deductor might have deposited the money all right, but with inaccurate details like wrong PAN, name etc. of the person on whose behalf he has deposited the tax;
iii) The bank might be sitting on the statement without uploading into the department’s website (AS-26);
iv) The bank might have uploaded but with inaccurate details.
In each one of the above scenarios, the malaise lies elsewhere but the cross has to be borne by the poor taxpayer who is not at all at fault but has to reap a bitter harvest of others’ inefficiency, lethargy and lack of bona fides. In Kingfisher like situations, the defaulters must be dealt with severely because he is shortchanging two persons - the taxpayer and the exchequer.
Submission of statement to bank with inaccurate details is a human error that can be avoided with due diligence, and importing the particulars from a robust database whose integrity has been tested and reinforced. Banks have no vested interest in sitting on tax received. Lethargy explains their passivity for which there must be deterrent monetary penalties.
And lastly banks should not invite trouble by duplicating the efforts of the deductor and go ahead and upload into the system the particulars as submitted by the deductor.
Whatever the extenuating circumstance for the mistake, taxpayer should not be penalised for others’ mistakes. The CBDT is clearly wrong in denying credit to the taxpayer merely because his claim is not borne out by AS-26. So long as a taxpayer has a genuine TDS certificate to back his claim, his word must be accepted.
It is for the CBDT to proceed against those erring in the TDS chain. What it is instead doing is passing the buck to the taxpayer and making him a fall guy. At best a taxpayer can follow up with the payer of income but even that must be considered a goodwill gesture even if it is tainted with the sin of self-interest - to save one’s own skin.
Much the same happens with advance tax. To be sure, AS-26 and taxpayer’s own record should normally tally but then we are not living in an ideal world. In such a scenario, it is unfair to deny a taxpayer credit for the tax he has paid. To be sure again, the department refunds the tax paid twice over but the point is why the taxpayer should pay up again when he is not at fault.
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eople with an income of more than Rs 50 lakh per annum and having the pleasure of owning a yacht, aircraft or valuable jewellery will now have to disclose these costly assets with the IT department notifying a new set of Income Tax Return (ITR) forms for assessment year 2016-17.
Explaining the rationale behind making Aadhaar mandatory for filing income tax returns, Jaitley said the move is aimed at curbing tax evasion.
FM should have mandated a hefty penalty of Rs 1 lakh per month or part thereof for corporates found remiss on this score