Is It Fair
As we entered into the 21st Century, all government
departments gradually started shifting towards e-compliance of various laws. The
basic ideology of e-compliance is to be taxpayer-friendly and in the long run to
save time, money and effort which would otherwise be required in manual
compliance, during the process of shifting from manual compliance to
e-compliance, certain genuine difficulties are faced by both the taxpayers and
the professional community. This article basically examines some of such
hardships.
1. PAN : We all are aware of the failure of the Income
Tax Department in issuing PAN cards when the system was introduced a decade ago
— several assessees did not receive the PAN cards even after a lapse of a number
of years. In many instances, 2 PAN cards with different numbers were issued to
the same assessees. Ultimately, the Department outsourced the PAN work to UTI &
NSDL.
Though, it has expedited the process of issue of PAN cards,
it has its shortcomings too.
1.1 Recently, NSDL people are insisting that the proof of
assessee’s father’s name be submitted along with assessee’s name.
1.2 If the voter’s identity card of applicant bears his name
as Ashok Jain and in the next row it bears father’s name as Sanjay Jain; and if
the assessee desire his name on the PAN card to be ‘Ashok Sanjay Jain’, the
application is rejected on the ground that father’s name is not appearing along
with assessee’s name on the ‘voter’s identity card’.
1.3 In certain communities, the system of writing surname is
not prevalent. It becomes very difficult to obtain PAN card for taxpayers of
such communities.
1.4 The system accepts only 25 characters in the name of the
assessee. Now, if the name of the assessee is longer than 25 characters, it has
to suitably abbreviate it. For example, if the name of company is :
‘Vishwasaraiya Swaminathan Murlidharan Textile Processing Private Limited’.
The assessee will have no choice but to abbreviate its name
in the PAN application. The consequent problem is that it will have to put the
same abbreviated name in its e-return and e-TDS quarterly statements. Otherwise
those returns will show mismatch of PAN. There would also be a problem as the
full name may appear on TDS certificates.
1.5 In some communities, the name of the grandson is the same
as that of the grandfather. It also creates a problem in PAN application as it
appears like John Abraham (Son) & Abraham John (Father).
1.6 If the ration card is in the name of father and other
family members’ names are included in the list on the last page, then
surprisingly the ration card is not accepted as address proof for the family
members.
Is the Department implying that there should be separate
ration card for every member of the family.
All the above problems in applying for PAN are further
aggravated by the fact that the Department has gone faceless.
2. e-Return : e-Return has been made mandatory for all
company assessees and for Individuals, HUFs & Firms liable for tax audit. Some
of the problems faced are :
2.1 The maximum rate of dividend accepted by ITR -6 is 100%.
Can’t a company declare more than 100% dividend ?
2.2 The ceiling for deduction u/s.80D has been increased to
Rs.15,000 w.e.f. A.Y. 2008-09. But the ITRs still accept only Rs.10,000 as
maximum deduction u/s.80D.
3.1 e-Payment : e-Payment of taxes has also been made
mandatory for all corporate assessees and for non-corporate assesses subjected
to tax audit. In remote and mofussil areas, it may become extremely difficult,
especially for non-corporate assessees to pay taxes electronically. If e-payment
is a facility for taxpayers, what is the need for making it mandatory ? And if
an innocent individual taxpayer subjected to tax-audit makes payment of tax
manually, will he be denied credit for the taxes paid ? (It is learnt that
recently Service Tax Department has started levying penalty of Rs.5,000 on those
tax-payers who are liable to make e- payment but are paying taxes manually). Is
this fair ?
3.2 The dematerialisation of TDS Certificates, which was
first attempted by the government from A.Y. 2005-06. The implementation has been
postponed from time to time and by the Finance Act 2008 has been postponed
directly to A.Y. 2011-12. This postponement is due to lack of technological
infrastructure at Department’s end. The question is : Is it fair to make
technology mandatory for the tax-payer ? The taxpayer has no choice but to bow
down to these dictates. To be fair, the Department should introduce flexibility
in the system and avoid the existing mechanical approach it has.
Conclusion :
There could be many more such issues. Great hardship is faced
by many assessees and tax professionals. Readers are welcome to share their
experience and views so that a meaningful and effective representation can be
made.
The author has always believed that procedures should not be tax-friendly on
paper, but should really — that is in practice — be taxpayer-friendly.
