The Hindu Editorial Analysis | 18th August ’20

Table of Contents

Make it less taxing | IndExp

Prime Minister Narendra Modi launched the “Transparent Taxation — Honouring the Honest” platform.
Aim: easing the compliance burden and rewarding honest tax payers
Only 1.5 crore paid taxes in a country of 130 crore
We need to widen the tax base.
MyGovIndia tweet: proposed an increase in the list of reportable financial transactions by individuals.
It will dramatically increase the compliance burden of honest taxpayers, and create even more space for harassment by an overzealous tax administration.
- Hotel payments over Rs 20,000, life insurance premium above Rs 50,000, and health insurance premium over Rs 20,000
Such transactions are incurred by large sections of the salaried middle class.
Surely, in the age of big data, there are better ways of sourcing and cross-checking this data to check for evasion rather than putting the burden of compliance on taxpayers.
The dissonance between the prime minister’s talk of a tax system that is “seamless, painless and faceless”, and such proposals is too obvious to ignore.
Complex laws and procedures, compounded by an inefficient and uncooperative tax department will further disincentivise compliance.
Rather, the focus should be on building up the capabilities of the tax department to check tax evasion.

Making tax compliance easier | ToI

It meets the requirements of a 21st century taxation system.
- Faceless assessment, faceless appeal, and taxpayers’ charter
- Providing a transparent and taxpayer friendly regime
- Forging trust between the tax department and taxpayers
The system comes at an appropriate time, as the digital nature of the process ensures continuity through the Covid pandemic.
Faceless assessment and appeal mechanism
- Imparting greater efficiency, transparency and accountability
- Eliminating physical interface between taxpayers and tax officials
- Promoting ease of compliance and functional specialization
- Improvement in quality of assessment
- Expeditious disposal of cases
‘Taxpayers’ Charter’
- Step towards assuring the taxpayer of fair, courteous and rational behaviour from the tax officials
- The tax department is now committed to provide all facilities required to honour and make the lives of honest taxpayers easy, such as fairness, privacy, timely decisions, confidentiality and accountability.
- The taxpayers’ charter also expects taxpayers to be honest, compliant, timely and aware.
Honest taxpayers are important for the development of the country and the government’s commitment to make the lives of such honest taxpayers easy is commendable.
The faceless e-assessment system would foster voluntary tax compliance and bring about an expansion of the tax base.
The transparency and objectivity brought in by the new system will reduce tax litigation, which hitherto has been a major challenge.
The use of technology to that end will help build trust within industry and among wealth creators.
In the last few years, tax scrutiny cases have reduced by almost one-fourth, from 0.94% earlier to now 0.26%.
Under the Vivad Se Vishwas Scheme, almost 3 lakh cases have been resolved out of court in a very short time frame, which is a major milestone.
Amidst all these efforts, the number of people filing income tax returns has increased by about 2.5 crore in the last 6-7 years.
However, it can also not be denied that only 1.5 crore people pay taxes in a country of 130 crore.

Time to be honest | Pioneer

Modi: “Honest taxpayers play a crucial role in national development. When the life of an honest taxpayer is simplified, he progresses, which leads to the progress of the nation too.”
The resources garnered by collecting cess from the people, who regularly pay their taxes, are the bedrock of any country’s development.
This is more so for India where the Government pledges to fund various development schemes/projects and welfare programmes even while maintaining fiscal discipline.
The platform stands on three main pillars.
- First is faceless assessment
- Second is faceless appeal
- Third is the taxpayers’ charter
While, the first and third took immediate effect, the second pillar will be enforced from September 25.
The idea behind faceless assessment is to ensure that the person paying tax does not know who the tax officer is and vice versa.
Faceless e-assessment eliminates territorial jurisdiction and substitutes individual discretion with team-based assessment.
The aim is to bring transparency and objectivity to the process.
There could not be a more potent way of eliminating corruption that has been the hallmark of the taxman, the assessee’s interface for decades.
If, assessment of Income-Tax (I-T) Returns (ITR) is faceless, logically the appeal against the assessment order passed by the tax officer has to be faceless, too.
As in case of e-assessment, the appellant won’t know which tax officer will be passing an order on his appeal and vice versa.
According to the Central Board of Direct Taxes (CBDT), all orders will be passed by the National E-assessment Centre (NeAC) through the faceless assessment scheme only, barring those assigned to central and international charges.
Nearly half the strength, i.e. 3,500 assessing officers, have been moved to the faceless assessment function and the remaining won’t be needed, henceforth.
However, there are some grey areas, particularly with regard to reassessment, investigation, Tax Deduction at Source (TDS) and so on.
Reassessment involves the re-opening of an already completed assessment and re-evaluating the total income of the taxpayer by including the income which has earlier escaped assessment.
Currently, 30-40 per cent are reassessment cases only and those will be in jeopardy as in respect of these, surveys won’t be allowed.
This leads to collateral damage as it will deny the I-T Department extra tax on the portion of income that had escaped earlier.
The new dispensation may not augur well for complex cases that require better understanding with the taxpayer or where there are issues arising from a differing interpretations of the law.
The Government needs to debate whether these could be sorted out through e-communications alone or need to be supplemented with a physical interface (with a provision for video recording to guard against any dubious dealings).
A computer-generated Documentation Identification Number (DIN), to be launched from October 1, will be mandatory for every type of communication with the I-T Department, be it a notice, a letter, an order and summon, or any other correspondence; without it, the document and communication will be deemed invalid.
Freedom from the present cumbersome regime won’t come merely by stipulating that “companies have the option to choose.”
In indirect tax, too, the Goods and Services Tax (GST) is far from being a simple tax as there are too many tax slabs, several items such as crude oil, petrol, diesel and so on remaining out, a number of tax-paying categories depending on turnover threshold.
As for the tax regime, the Government should scrap all exemptions/deductions; apply a uniform tax at the rate of 15 per cent on firms.
For individuals, it should be at the rate of 7.5 per cent on income less than Rs 10 lakh and at 15 per cent on income higher than this threshold.
Under the GST, it should go for two slabs, say five per cent and 10 per cent and no exclusions.

Policymaking has to take the lead in addressing urban-rural disparities | IndExp

Agriculture has been the source of strength in these distressing times for the Indian economy.
The monsoon has been good. Kharif sowing is at its peak. Government policies have been supportive.
The challenge is to maximise the growth impulse and strengthen it as much as possible so that the deceleration in the economy is compensated to the greatest extent.
Markets and price support are a focus of policy.
MSPs have been announced and market access has been emphasised.
India has the largest system of agricultural markets in the world.
But what does a “market” mean?
Most agricultural trade actually takes place outside APMCs.
The facilities are abysmal.
In this period, we can do much to strengthen both the first stage agro-processing infrastructure (supply chains) and the functioning of markets.
The real bottleneck in the COVID-19 kind of pandemic is the “lockdown”.
Economists are not good on matters of death — they are trained to analyse matters of life.
I was not surprised when my friends, Montek Singh Ahluwalia and Kaushik Basu, talked of life after Covid. The real challenge is actually the “up to-then policies”.
We have to suggest policies for agriculture within the context of the lockdown. One possibility is to allow trucks for agriculture transport under special conditions.
The same can be designed at the government level for the railways.
The desired strategy has to be one that links the large villages, medium and small towns with the urban areas, not only through the development of economic infrastructure (roads, markets, electricity etc), but also building social facilities in the “rural-urban continuum”.
We cannot only concentrate on public private partnerships (PPP) in large cities.
Nothing ever succeeds in India, I was once told at a global meet. To which my riposte was, nothing also fails in India.

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