Thursday, June 16, 2016

The best way to ask for our money is to be polite.

While we support the Prime Minister in his efforts to reform the economy and his efforts to change the sclerotic mindset of glorifying poverty and we understand that India cannot become rich without top-class infrastructure, which cannot be done without lots of money, we cannot agree with his assessment that vast numbers of Indians are cheating on taxes. In a speech to tax officials he asked them to increase the number of taxpayers from 54 million to 100 million while being taxpayer friendly. That is like asking dentists to be gentle while pulling teeth. How is it the fault of tax officials when the government itself sees citizens as serfs to be punished unless they obey orders, however unreasonable they maybe. An article on 14 June warned us that advance tax for individuals had been advanced from 30 September to 15 June and anyone failing to comply would have to pay interest at 1% per month. Even China does not treat citizens with such brutal lack of respect. How can we be paying less tax when the Income Tax department had to refund Rs 1.22 trillion in excess collections? Since most refunds are in thousands of rupees imagine the number of officers being paid to do this useless job. If tax officers are urged to look for more taxpayers they are tempted to browbeat people. Hasan Ali Khan, a businessman in Pune, was asked to pay Rs 1.66 trillion in taxes, which was reduced to just Rs 30 million by the Income Tax Appellate Tribunal. The extent of wrong tax demands can be measured from the Rs 7 trillion in disputed taxes that the government will probably have to write off. Rich people have an army of lawyers and accountants to look for loopholes while we, the people, are helpless. If the government really wants to increase the tax base then it should help us to pay only what is legitimate income tax. For that everyone should have just one account number, preferably in a public sector bank. If a person wants to open another account in another bank or in a different city the permanent account number will be incorporated in the new account so that all information is automatically transmitted to the original bank. It will save a lot of bother by eliminating Know Your Customer formalities. Tax officers will be posted in each of these holding banks and will collect only the amount that is payable. They will also advise people on how to minimise taxes legally so that we do not have to pay accountants. The government may charge 1-2% of tax paid as fees for advice. This adversarial system was designed by the British. Our government should be trying to serve our interests. Only if it respects us.

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