The Certificate Category has got no relation with the Tax Compliances or the honesty with which tax deposit has been done by Tax Payer. Assuming a man has just deposited Rs 1 lac of Tax with full honesty, yet he will get Bronze Category of Certificate as against Rich Assessee who has deposited a Crore plus of income tax, would get Platinum Category of Certificate though he might have evaded tax
As you must be aware that recently Income Tax Department has sent Appreciation Certificates in bulk to almost all tax payer assesses. The certificates have been issued to assesses who have filed their return in time and have paid all due taxes while filing the return.
The certificates are of four categories- Bronze, silver, Gold and Platinum. Many Clients of mine came to me, that does it mean they will not be selected for scrutiny this year? Or will it help if their case is selected for scrutiny this year? Answer was NO in each case.
What do these Certificates mean- The certificates are supposed to measure by the Government to show its friendly face to honest tax payers, but would such measures make any sense?
Would these Certificates instill any sense of confidence in the tax payer’s mind that they will not be harassed any further?
Chances are no- These will not help
Criteria of issuing Certificates– Many leading tax experts have questioned the criteria for issue of certificates. The certificates issued (Bronze, silver, Gold and Platinum) are issued on the basis of tax deposited by the tax payer.
Thus, the certificates represent the Social Financial standing of the individual and not the honesty. So what do these certificates mean? Many Tax payers have angrily reacted to that as “What the use of this certificate? Don’t make the people of India fool by false promises and meaningless appreciations”
There are many deep-rooted fears and misconceptions in the minds of assesses which would not go so easily. The above measure may be out of good intentions, but may not help unless the core issues of malaise in the department and its functioning are addressed
Some issues that lead to Tax Evasion and consequently Prosecution or Harassment of the Assesses that needs to be addressed are-
- High Rate of Taxation– India has one of the high rates of taxes in the world. Especially when you add together all taxes i.e. Income Tax and taxes on consumption (Sales Tax, VAT, Excise duty or now GST).The initial exemption limit is so low and if you adjust with inflation it keeps getting lower every year.
- Those who argue that some other countries have also similar rates of taxes, forget the social benefits that those countries offer. In India, Health benefits or Education Benefits are almost gone. You cannot live without a Health Care policy as the state of Public Hospitals is well known. Who would like to get his son or daughter admitted to a Government School?
- High Cost of Compliance- With electronic processing of returns, this problem has been substantially reduced but the sending of notices by Income Tax department on frivolous reasons as cash deposit in Bank Accounts, getting house plan approved, share trading etc have added further burden on assesses
- Harassment of Tax payers– These harassments come in various forms- Typically in any notice by Income Tax department asking for physical presence, all assesses are given time of 11 AM to attend the office. Now how many assesses would the assessing officer be able to handle at one given time? Why cannot he give staggered time. Even at that time given, the influential advocates often barge in keeping not so well connected assesses wait
- No relief to Assesses where the deductor has not deposited TDS with Government-This is one of the burning issue being faced by assesses. Many Deductors do not deposit the TDS in time or even if they have deposited the TDS, fail to file TDS return in time. As per present laws, such assesses are not allowed credit of such taxes paid unless the same appear in the form 26AS. With Government having ample powers to recover the tax from such assesses and even powers to imprison them, in cases where assesses can prove that the tax has been duly recovered by payers, such assesses should be allowed the tax credit
- Reduce the number of Return forms to make it truly Simple- Government has issued multiple forms for various categories of assesses and their number can definitely be reduced. Example, why not 4S and 4 be made common Or why not one single form for assesses having capital gains and other income; Why those having rental income from more than two houses have to fill a different form?
- ITR forms should allow space for Comments- Much on line of the Tax Audit report formats, where a CA can add his comments on a particular compliance, in return forms too, there should be a space provided to allow assesses to share their view point or submit clarification.
Clearly the Government has to do a lot to change its present image to assesses friendly with less intrusive assessment