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A. Introduction:

There has been a lot of talk off late over ‘ease of doing business’ in India and the Government at the center is enthusiastic about the improvement in India’s ranking in ease of doing business.

The very structure of ease of doing business in India rests on various pillars. One of such pillars is the tax administration system in the country. Taxes are the single major source of revenue for the center, which consists of direct and indirect tax. Since independence it has undergone sea changes. However the present state of affairs in Indian tax system leaves a lot to be desired.

It needs a complete makeover in order to transform it into an effervescent and pulsating one! A few grey areas are identified in this article based on practical experience, improvement of which would go a long way in realizing a tax professional’s dream of an efficient tax system in the country.

B. Strengthening the server capacity:

The first and foremost thing is to strengthen our existing server systems be it income tax, MCA or GST portals. It has been a tough experience over the years that more often than not these websites crash on the last day of heavy filing. They tend to go either dead slow or not working properly at all. The experience with GST website these days on last couple of days of filing GSTR-3B and GSTR-1 is even more embarrassing. As a result the Government is forced to extend the deadline on quite a few occasions.

This is not a happy situation by any stretch of imagination. It is high time to use advanced server systems as proper and well oiled functioning of these websites are of utmost importance for our tax administration particularly during peak filing seasons. IT is the backbone of our tax administration and the Government must spare a thought in this direction, probably in doing so they may take a leaf out of the book of popular search engine google and gmail.

C. Separate tax bench:

There is an urgent need for constituting separate dedicated tax benches at every High Court in the country so as to ease out the burden of High Courts and also to address the tax matters in an expedious manner. These tax benches may consist of eminent tax professionals of the country and members of judiciary who have vast experience and knowledge of tax laws in the country.

D. HC and SC verdicts to be honored at all levels:

It has been the experience that HC and SC verdicts particularly those who are in favor of assessee are not followed in letter and spirit by income tax authorities. Most of the time, either AO is not aware of any significant ruling in favor of assessee or he tends to interpret it according to his own version. AOs quite often brush aside the judgments quoted by the assessee merely on the pretext that the facts of the case are different and are not applicable to the assessee. It has been observed that they have a pre conceived notion in assessment proceedings and they often ignore to understand and assimilate the ratio decidendi of various judicial pronouncements. To remedy the situation, the AOs must be trained to be conversant with the ratio decidendi and also keep abreast of latest judicial happenings in taxation. This will go a long way in improving the quality of assessments and also improve department’s image.

The CBDT may ensure strict & monitored compliance with HC and SC judgments at the department level irrespective of whether they are in favor of assessee or the department.

E. E-assessment proceedings to be launched nationwide:

To combat corruption and to minimize human intervention, e-assessment proceedings recently launched is a welcome initiative. It facilitates e-governance, reduces paper work, minimizes human intervention and enables the tax payer to participate in assessment proceedings conveniently. Another important advantage of e-assessment proceedings is that entire proceedings are available online hence record of assessment is maintained in soft copies both at the AOs side and at the tax payer’s side.

Being advantageous from point of view of department and the assessee, it is desirable that e-assessment proceedings may be extended nationwide irrespective of turnover, city and profile of the assessee. This will reduce compliance costs.

F. Public grievance system to be strengthened:

One of the hallmarks of an efficient tax administration system is timely and satisfactory disposal of public grievances. Strict adherence to time limit for redressal of public grievances and monitoring of public grievance system is a need of the hour. Presently, public grievance portal is the only portal available for registering all types of public grievances. But redressal of public grievances through this portal takes a lot of time sometimes more than 6 months which defeats the very purpose of timely redressal of public grievances.

G. Fixation of strict time frames for launching utility for return filing:

At present, the Central Government has tightened the noose around tax payers and tax consultants in both income tax and GST by limiting the time period for return filing without late fees. In income tax all non audited returns are to be filed till 31st July failing which a late fee ranging between Rs 1000/- to Rs 5000/- would be levied. Similarly in GST also we all witness hefty late fees for even a single days delay in filing GSTR-3B every month. It has been the experience that in income tax return filing utilities are made available in phases and that too after a considerable period of time for all return forms resulting in extension of deadlines on the penultimate/last day.

It is also very well known that various High Courts in India were flooded with writ petitions for extension of tax audit deadlines. This defeats the Government’s objective to secure timely compliances and to make India a tax compliant society.

Moreover, if tight deadlines are declared for tax professionals and tax payers across the country so be it for tax authorities as well who are responsible for declaring tax return preparation utilities.

H. Efficient helpline:

Efficient, well informed and well trained helpline to handle all types of queries and problems faced by tax payers and their consultants so as to make it a reliable one stop solution is suggested. Though presently we have separate helpline numbers for Income Tax and GST, it is suggested that the system must be made somewhat more robust as it has been the experience that on quite a few occasions, helpline is unable to provide a satisfactory and reliable solution to the issue reported.

It is suggested that a two tier helpline system may be introduced with separate toll free numbers. Toll free numbers may be provided sufficient extension numbers so as to handle multiple queries at the same time. The first tier of helpline may address all issues relating to online return filing, availability of return preparation utilities and all IT related issues whereas the second tier may address all issues & queries arising out of tax provisions.

Users must be encouraged to submit their feedback on quality of resolution provided by helpline at both levels and user satisfactory level must be monitored so that services must be constantly improved. It is desirable that both tiers may be kept multi layered so as to ensure that if user is not satisfied with resolution provided at a particular level based on his consent his query may be passed on to the next level.

Concluding remarks:

The above is not a conclusive and exhaustive list, it is merely author’s attempt to identify a few grey areas based on real time work experience which needs attention at the highest level. The suggestions are also made from the author’s point of view. As different people have different perceptions, some people may or may not agree with author’s views depicted above.

Moreover, tax professionals across the country may have lot more to say and suggest more measures to improve our tax administration.

Nevertheless, it may be concluded by saying that tax reforms must not only be limited to making tax laws more effective. Improvement in overall structure of our tax administrative machinery is the need of the hour, which if implemented in right earnest will surely pave way to an effervescent and pulsating tax system in the country.


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Category Income Tax, Other Articles by - CS Abhishek Goyal 



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