Dear Members,
Greetings from Mumbai! The 49th Residential Refresher Course (RRC) just got over, with 6 papers of contemporary importance. The participants enjoyed the learning in leisure, which is the basis of the RRC. RRCs started with this idea 50 years ago and now we are just a year away from the golden jubilee year of the RRC. In several countries professionals, like doctors, get paid leave of up to 2 weeks to study the developments in their specific fields. An RRC is this dedicated time, earmarked to study the current changes through discussions with fellow professionals and experts.
The Union Budget will be announced on 29th February 2016. This will be the second full fledged budget from Modi Sarkar. Recently, BCAS was invited to present before Mrs. Sushma Swaraj, Cabinet Minister for External Affairs who was asked by the PM to conduct a ‘Samvaad’ session to receive direct feedback from the Chartered Accountants fraternity on tax matters. She appreciated some of the points suggested by the Society especially on the attitude of the tax officers towards the assessees. Although the Society makes representations to the MOF, for more than 4 decades, from what I know, the voice of the profession is ‘heard’ only infrequently. We hope that the government that has a plank of ” Sab a Sath Sab Ka Vikas” will hear what the professionals have to say.
Nani Palkhivala, a fighter of civil liberties and defender of our constitution wrote: “Elections can change the governing faces; budgets can change the face of the state” The budget each year brings a sharp focus on economic and tax reforms. The motivation for change in the present government is certainly there, however the pace of execution needs to match it.
Tax laws above all should be Clear, Just and Simple. Every citizen expects tax legislation to be fair, balanced, easy to use, reasonable, low on procedures, less prone to interpretation and litigation. Over the years the Income Tax Act has become more of an incomprehensible monster. Disfigured by thousands of amendments, qualified by provisos and blunted by ‘deeming’ fictions. The size, shape, teeth, colour, feel of the law has become incongruent with the basic forces of human nature, where its acceptability has diminished.
If the meaning of “Sab a sath sabh a vikas” was to be actioned, then, collaboration would be the essence of law making. Today the budget has become an exercise carried out by the administrators alone to collect more revenue. What Mr.Palkhivala wrote still rings true “The budget should not be an annual scourge but should partake of the presentation of annual accounts of a partnership between the government and the people. The partnership would work much better when the nonsensical secrecy is replaced by openness and public consultations, resulting in fair laws and the people’s acceptance of their moral duty to pay.” A larger debate, participation, responsiveness from the law makers is the need of the hour to create nation building. Collaborative approach is where the world is headed, be it social interactions to running successful businesses; people are coming closer, exchanging ideas and feel a sense of belonging. The Indian government is a segment that is left behind, to make people feel it is ‘of the people’ and ‘for the people’. With several schemes announced recently let’s hope that ache din are coming closer.
Each of us has a wish list for the budget. I thought of taking this opportunity to share some thoughts playing on my mind and hope they mirror yours too:
1. Attitude change – The officer needs to think that the tax payer is his customer, a respectable citizen of the country to whom he is there to serve. A tax payer is not a cheat and earning more money does not imply that a business is carried out with unfair means. In fact every healthy business is vital to the nation. Attitude change on the part of the tax officer is vital and it has to come from the ones who govern before the governed. Being helpful, fair, respectful, reasonable, supportive and not just an agent to meet tax targets, will mean ache din for the tax payers.
2. Ease of Paying Taxes – The ‘ease’ aspect must become pivotal to all tax laws. For example, TDS procedures, which are tedious for small and medium businesses should be eased for smaller tax payers. Thresholds for TDS are increased. Yearly compliance for filing statements and issuing forms should be allowed. This will make smaller tax payers come around and reduce dodging. Another example could be of having a Tax Paid Passbook system, which can be used by tax payers to attribute taxes so as to end issues of non-payment, interest. Or even bring presumptive taxation for many other trades and professions to make it easy to do businesses and promote entrepreneurship.
3. Master Circulars – Compile all tax clarifications in a systematic manner to be useful and sensible. Just like the Reserve Bank of India, the Tax Department should come out with sets of Master Circulars once a year. Each topical Master Circular could cover an updated compilation of all circulars on that topic and clarify the position of the tax department. This will bring some method to madness and bring sense to the tax laws.
4. Stop Mutilation – Amendments should be restricted. In the words of Mr. Palkhivala – “Today the income-tax Act, 1961, is a national disgrace. There is no other instance in Indian jurisprudence of an Act mutilated by more than 3300 amendments in less than thirty years.” Today it has crossed about 8000 amendments. Certainty and respect for law and administration can only come when there is stability in the law itself.
5. Use of English – The language in Income Tax act is at best awful, crude, boring, distasteful and obnoxious. Use of such language to make laws in a country like ours should be included as a form of intellectual cruelty on citizens. Why should our laws not be written in PLAIN ENGLISH when millions are uneducated, where interpretation related litigation is rampant, and language should rather be a means of communication and not complication? Clarity, precision, brevity, freedom from legalese should be the hallmark of drafting. Can we not write a law where the writing is of a natural and normal human being? New Zealand Parliamentary Counsel Office has brought out a paper where such despicable use of English language in law making is forbidden. It’s time we do the same, then ache din will not be too far.
6. Discretion, Interaction and Transparency – It may be worth attempting to reduce / minimize interaction with the tax officers. Establishing Accountability for passing orders that are reversed at next levels, transparency in disclosing key data such as pendency, reversal of orders, average time of assessment, average time for rectification, average time for granting refunds, average time complaints resolved, customer satisfaction surveys, total compliance with citizen’s charter at a jurisdictional level would bring better administration and tax payer confidence. Clarity of department’s positions should be mandatory. Every use of discretion / interpretation should be made with signing off by higher levels. The department requires enormous efforts to make its positions clear on new laws, contentious issue, and must be held responsible for litigation costs where orders are reversed. We welcome some steps in this direction taken recently.
The Society has made a representation to the MOF on substantive provisions, which is placed on our website. We eagerly hope to see action, reaction or response. Without some fundamental changes, the Union Budget will just be another yearly event, celebrated by CAs, followed up by a few talks, a few meetings, few CPE hours and few more publications. But will it really bring ache din to the tax payer? Will it change the face of the state? Will it end our wait? Will it finally address aspiration of the people? Will it result in ” Sabh Ka Sath Sabh Ka Vikas” ? Let’s see.
