One of the pet peeves of India Inc in the previous couple of years has been “tax terrorism”. There are numerous situations of how the ubiquitous tax inspector, which reminds 1 of the pre-1991 licence quota raj, has also been accountable for misery and even deaths. The Narendra Modi government, which has completed six years in workplace, has belatedly taken measures to streamline the tax administration program, thereby assuaging India Inc and taxpayers. For a government that calls for respecting wealth creators, this is a significantly-required, welcome move.
It’s just not the tax inspector and tax terrorism the sheer quantity of earnings tax instances pending just before the ITATs, higher courts, the Supreme Court is thoughts-boggling. The time and power that we invest on the resolution of these disputes can certainly be utilized in extra productive engagements.
While instances pending just before the ITAT in 2017-18 have been about 37,500, they elevated some 2.4 instances to about 92,000 in 2018-19. These numbers do not inform us about the enormity of the issue.
Consider this: A thoughts-boggling sum of Rs 8 lakh crore is the quantity of taxes on earnings tax beneath dispute, at the finish of 2018-19. And, what is the tax quantity not beneath dispute? Rs 1.38 lakh crore. What does this say about the tax administration program?
Considering that as significantly as 60 % of the outstanding disputes have come in the final two years, in the present regime, shouldn’t the incumbent government address the problem on a war-footing?
If 1 desires to appear at how the program functions towards earnings tax dispute resolution, these numbers should really be an eye-opener. Of some 31,000 appeals pending just before the Commissioners of Income Tax – Appeals for extra than 5 years on April, 2019, only some 7600 have been cleared till November-finish, 2019. A pendency of 75 %! What does this say about the tax administration program?
Going by rough estimates, and anecdotal proof, it could take anyplace from 20 to 25 years for a tax dispute matter to be resolved – from the time an assessment is performed to the time the apex court decides on the matter. This should really concern all, which includes India Inc and the government.
The government has lastly woken up to the issue, and taken some belated, welcome measures. PM Narendra Modi, early this year in August, launched the platform, ‘Transparent Taxation — Honouring the Honest’. It entails faceless assessments, faceless appeals, plus a taxpayer’s charter — which was talked about in this year’s Union Budget.
It’s getting stated that faceless assessment and appeals would be a boon as they get rid of any physical interface in between taxpayers and tax authorities. It’s therefore anticipated that it will decrease the discretion of the tax inspector, bring in transparency and efficiency in the assessment and appeal approach. Hopefully, the situations of tax terrorism will be a previous hereafter. This is a significantly-require tax reform.
How does the architecture of this approach work? It’s getting stated that taxpayers will not be attached to a certain workplace / territory / jurisdiction for any assessment. It will be the National e-Assessment Centre (NeAC) that will facilitate any communication in between taxpayers and tax authorities. This, hopefully, will go a lengthy way in decreasing tax litigations.
More revolutionary measures could be believed of. Like CBDT could concentrate on resolving the enormous quantity of pending appeals just before numerous fora.
Faceless assessments will be welcome by the taxpayers. The really believed that the tax inspector has been pushed to the background brings relief. Now, the government and authorities require to work on timelines. All pending tax appeals should really be cleared inside a stipulated timeframe.
Our taxes assistance create the nation. It’s time that we taxpayers are respected for that, and not harassed. It’s time that the tax program was cleaned, and streamlined – so important for ease of undertaking small business in any nation.