India surprises both the optimist
and the pessimist. Some of the greatest, finest, unique and fascinating things
happen in this country. Some of the weirdest, obnoxious and unimaginable things
also happen at the same time. You will be wrong and you will be right if you
say things are getting better or things are not improving.
What stops India is India itself.
The attitude of Obfuscation1 and insistence on obfuscating wherever
possible seriously impairs the ability of the nation to move faster. It can be termed
as a fault line – as in a problem that may not be obvious and could cause
something to fail. Obfuscation has many facets – having processes larger than
purpose, making things hyper-technical, making things subjective and obscure,
bringing in a new compliances without adequate notice or clarity and so on.
Obfuscation makes things harder to understand, harder to action out and
difficult to serve an effective purpose.
Some recent experiences got me
thinking about this topic and its impact on dragging our country:
i. I
recently opened a new bank account for my minor daughter. The bank form
required signatures at about twelve places.
ii. I
opened a ‘distribution account’ with a certain company. The form was for
allowing me to make investments through them. The form asked me to give:
a) Details
of income, wealth, investment experience, …
b) FATCA
/ CRS / UBO declaration – not only for that investment entity, but for CAMS,
Karvy, etc. It felt like someone outside India wanted to track me in my own country
for wrongdoing I could be involved in, according to the laws of that country
and I had to sign off to prove that I was on the right side from their
perspective;
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1 An act of making something obscure, unclear,
or unintelligible. Latin obfuscatio, from obfuscare (to darken)
c) KYC
– In spite of having PAN, Central KYC Registry CKYC Number, Aadhaar – I had to
once again give PAN, Aadhaar, Address Proof or face long argumentation with a
compliance team on why this was mandatory.
iii. I also opened a Share Trading account. I ended up signing at nearly
20 places plus on PAN and Aadhaar and of course signing across on my own
photograph.
I got a strange feeling of confirming
myself and certifying myself to be myself. For the world outside, I am just a
unit of statistics who has to sign off on long, winding and difficult to
understand forms at multiple places. While one can understand that frauds do
take place, particularly in financial services area and that the mechanism to
deal with them after they have happened is abysmally inadequate, an overkill of
this sort can be considered ‘necessary’.
However, some of this seemed to not meet the test of ‘reasonableness’
which should stand on an equal footing with the ‘necessary’ conditions in the
digital age. One would have thought that Aadhaar would make things easy for
common citizens. However, we are yet to reach the level of ease which was felt
at the time of buying a Jio sim card.
Tax Instances
India is shinning with many
examples of making things complex, perhaps far beyond their need to be so. In
the darkness of complexity thrives corruption, delay, disputes, low impact
compliances, distancing masses from their rights and from delivering what is
due to them! Recent examples from tax perspective will prove the point:
i. Tax
Audit Report (TAR) changes on 20th July 2017 for FY 2017-18 filing
in September:
a. While
almost all the changes could have happened before March, the tax office chose
to ‘wake up’ from slumber in July.
b. Isn’t
monthly GST data sufficient and available to the tax office, which is part of
the same ministry?
c. Why
should some assessees who file before 20th August 2018 be allowed to
file old TAR, while others have to file with new clauses?
d. If
there is delay in notifying the correct TAR form, why shouldn’t the assessee be
entitled to get more time to file?
e. Several
clauses do not appear to be relevant to most assessees and perhaps can find a
place elsewhere? Isn’t TAR already long and bulky?
Some clauses per se are
debatable for their fitness to find a place in the TAR itself such as the one
on GAAR. There are other clauses such as address or GST Numbers etc., which
should be included in the ITR instead or done away with, as they can be part of
the master data. Points such as primary adjustments (clause 30A) should perhaps
be sitting in Form 3CEB. Tinkering with TAR in the middle of tax season in
spite of strictures by at least two High Courts2 can perhaps be dealt with only when such acts
are legislated as an ‘impermissible arrangement’ in a new chapter XXIV titled
Tax Payer Services. The ICAI ‘Implementation Guide w.r.t. Notification 33/2018’ on Page 1 sums it up well: The
amendment to Form No. 3CD has thrown yet another challenge for taxpayers and
tax auditors, by mandating large reporting requirements, besides requiring
sitting in judgement on certain contentious issues.
ii. Changes
in ITR utilities post 31st March: ITRs were notified in April.
However, every single ITR utility has undergone changes between April and
August. Some have changed multiple times. ITR 2 was revised thrice.
iii. CBDT ‘incentives’ to CIT (A) for passing ‘Quality’ Orders: This
deserves special reference without any further comments as it is explicit. The
stunning part is the definition of Quality:
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2 Punjab and Haryana HC and Gujarat HC in
September 2015
a. That
which enhances the Assessing Officer’s (AO) order
b. Strengthens
the stand of AO
c. Levying
penalties under 271(1)(c) on additions confirmed by the CIT(A)
iv. Format
of Notices: A Notice, I had the privilege to respond to, had the same question
asked three times. Additionally, it asked for ‘Source of Income’. Wouldn’t it
be nice to take a few minutes and understand the assessee before shooting out a
notice. In this case the assessee is a tax filer for more than forty years.
When can a lay assessee expect meaningful and clear questions?
No doubt, many routine matters are
simplified by technology. We have come a long way. Yet our system justifies the
meaning of Obfuscation and gives it a new meaning. The Hon’ble President of
India, spoke for the second time this year and I quote his twitter handle: “The
taxpayer is your partner in nation building. Interaction with the taxpayers
should not inconvenience them.”
Even Albert Einstein said, “If you can’t explain it simply, you
don’t understand well enough”. Obfuscation shows that authorities miss the
point, way too often. Until we address these fault lines effectively and
promptly, our march to progress will be a few notches lower. We can celebrate
the jump in GDP growth rate of 8.2% for Q1 of 2019. At the same time we need to
ask – what made us stop at 8.2% and not touch 10%? To answer such questions we
will have to find the root causes and see if the tax payer and tax collector
can have unified interests. We will have to sort this out. In late PM Vajpayee
ji’s words we will have to walk together 
Raman Jokhakar
Editor
