A taxpayer is that rare citizen who creates value, earns income and parts
with a portion of it as tax for nation-building. Just as it is the ‘legal’
obligation to pay tax, there is a much ‘higher moral social’ obligation upon
the government to ensure that the taxpayer is treated as a valued patron and
ensure that his taxes give him a bang for his buck.
Faceless Assessment and the Taxpayer’s Charter (TC) is an awakening and
realisation of the above understanding. This move is what a wise government and
sincere taxpayer would want. PM Modi spoke candidly about making the tax system
‘seamless, painless and faceless’ and assuring the honest taxpayer of ‘fair,
courteous and rational behaviour’.
Over the last few years, calibrated sequential changes were undertaken –
the black money act, DeMo, post-DeMo amnesty scheme (GKY), the Benami Act,
reduction of rates for corporates and individuals, increasing the threshold for
the Department to litigate, dispute resolution Vivad se Vishwas scheme,
E-assessments, etc.
Since its first appearance in, I think, 1998, the TC has got its rightful
place from posters in hallways to the statute book. The directional change is
worthy of appreciation for what otherwise to many of us was a no-brainer. However,
this can only be a start in the direction of developing a real taxpayer rights
and services charter. We have harsh provisions against the taxpayer who
deviates, but none against the tax assessor if he deviates from his role. There
is a fundamental issue of power without adequate transparency and
accountability.
Here are some thoughts on how this process can be made real and robust.
Define tax overreach: We have
serious consequence of penalties and prosecution defined and applied on
taxpayers. For a law to be fair, we need equivalent definitions and
descriptions of tax ‘extortion’, ‘extraction’ and ‘jehadism’ (all for lack of a
vocabulary which needs to be evolved) on the Tax Department depending on the
intensity of their actions that eventually get turned down at subsequent levels
of appeal.
Accountability: Tax officers
must be held accountable monetarily and otherwise. An assessee should be
compensated for the hassle that she has to go through. Considering that the
success rate of the Tax Department is 15 to 20% at all levels combined, it is
clear that there is large-scale illegal collection of taxes that are
subsequently reversed with interest cost being suffered by the exchequer.
Another example is of prosecution, which if proved excessive or overruled, the
ITO must face the music for irresponsible behaviour that resulted in agony,
cost and loss of reputation. No exercise of power should be permitted
without accountability.
Create grounds for the taxpayer: The taxpayer should be able to take grounds of calling the order
‘perverse’, ‘excessive’, or ‘illegal’ (all for lack of a vocabulary which needs
to be evolved) and should be able to claim reverse penalty on the Department if
he wins. Grounds such as the above should be evolved and defined under the law,
and that would give the taxpayer equal ‘power’ to call the bluff of the ITO.
Ban on Targets: Setting
targets should be made illegal. The vocabulary, mentality and methods that
follow a ‘target regime’ create bias against a fair, respectful and reasonable
assessment.
The TC is perhaps one of the best news of the year. The change deserves our
support, encouragement and positivity. At the same time, as the title of this
Editorial says, it is 1/n, a process. I welcome and solicit your ideas and
suggestions on what should change in small simple measures, how a reform can
take form, a translation of fourteen points into actionable, doable measures.
Do write to journal@bcasonline.org.
Raman
Jokhakar
Editor
