[Excerpts of my speech at Conference on India 2.0 as a part of 37th SKOCH Summit at India Habitat Center, New Delhi September 2014]
“The only two things certain in life are taxes and death”. Why
was taxes compared with morbidity and death and taxmen considered a villain?
Because tax was considered legal extortion. The expected role of taxman was to
make life difficult for those who don’t comply. The tax laws were complex and
complicated that even genuine taxpayers ended up making mistakes. Instead of
being an enabler catching these mistakes was the prime focus of the department.
Complexity of the tax law was a aid in this enforcement by terror and a tool
for the corrupt.
The modern
tax department is attempting a shift in its focus. The shift is towards being
an enabler, making it easy and convenient for the genuine taxpayer to comply.
This is one
of the tectonic shifts that are happening in the environment for the tax administration.
There are more. The quantum leap in the volume of trade and commerce in the economy
is resulting in exponential growth in taxpayers and taxable transactions. The
globalisation leading increased international trade and e-commerce are adding
to complexities to tax administration. In India the impending transition to a nationwide
transition to Goods & Service Tax (GST) is another big shift expected in
the near future. (Though this near future shift has been eluding us for years,
we hope it will fructify this time)
In this
increasing complexity and exploding volume the challenges are manifold for the tax
administration especially with shift in their focus and the attendant reforms
it is attempting.
Let us take
a look at some of the expectations the taxpayer have with respect to these
reforms.
Simple, Up-to-date, consistent
information online
To begin
with the taxpayer expects simplification of laws which are easy to understand
and comply with limited exception and a nationwide standardisation. We also
expect comprehensive information available online. Today many of the tax
administrations in our country have web portals and have made extensive
information available online. But they often come with a caveat along the following
lines. “The department does not claim this to be up-to-date or comprehensive.
The taxpayer is expected to keep himself abreast of all latest notifications
and amendments and the department is not responsible for any fashion for any
error and omission in the information available in this site”
We need to go
forward in our information dissemination. We need you to guarantee that “what
is not published on our portal does not exist” I am not suggesting a utopian
model. Many regulators and law enforcement bodies in the world have already
reached this level of sophistication.
Will it be
possible to publish your interpretation of confusing provisions very clearly? In
this manner it would also be consistent in its dealing with the taxpayers
across the country. It could help in
reducing the rent seeking behaviour of many assessing officers who attempt to
interpret for their convenience.
Don’t ask for same information again
and again
Various tax
departments in the country ask the taxpayers same financial information
multiple times. Can you establish a mechanism to collect financial information
from the taxpayers once and share the same among them as needed? Only in case
in which it needs additional information for specific investigative purpose it
should contact the taxpayer again to provide the same.
Can we think about standardisation of
data format?
Different tax
authorities today specify different data formats and technology specific forms
to submit the data. Could you consider establishing a technology agnostic data format
like XBRL for collection of data? This would also require a standard taxonomy
being developed for all financial reporting for various tax departments if not
for all other regulators who require the same financial information.
Avoid calling me in person and when
you call please don’t make me wait
Can you
consider establishing processes that could avoid physical visits for routine
matters? Tax payers should be able to interact with the officers over phone or
mail for routine matters. Even when they are required to visit for some clarification
they should be given advance intimation of the documents and information they
have to bring and should give them appointment to and adhere to the agreed time
and avoid making them wait.
Can I pay tax from my account in my
bank?
In this day
and age of electronic connectivity can you allow me to pay all my taxes from my
account of choice instead of asking me to open accounts in different banks by
different tax authorities
What I am
hoping are not impossible to be met. But it needs a change in mind-set. We can
hope that we will reach there one day
To make a crooked stick
straight, we need to bend it the contrary way. - Michel Montaigne
