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Taxation Policy

CA CMA CS Ram Pavan Kumar Melam , Last updated: 22 May 2017  

"You don't pay taxes, Government takes them".

Power to tax is an inherent sovereign power of any government but in India a limitation is made under article 265 of the Constitution of India. As per this article "No tax shall be levied or collected except by authority of law".

Our constitution also guarantees certain fundamental rights and freedoms to its citizens.

Such kind of postulates by our constitution convince readily any stranger to feel India as a happier space to live in. In my view, the principles of constitution are just a theory.

Every successive finance minister of India came up with a deficit budget and used to address its people through their budget speeches to contribute a bit more taxes. Behind that polite sounding to pay a bit more taxes, there is a threat of penalties and imprisonment. Where did that authority has come from? Naturally from the authority of the law through which the taxes are being imposed on its people. Collection of taxes are necessary for survival of any country. It is not denied.

There are various departments and authorities to collect taxes from the people. But when it comes to spending of taxes collected by the bureaucrats, there is no proper scrutiny or surveillance.

The government is trying to 'full scan' the financial transaction of its people whereas it does 'custom or quick scan' on its officials.

The effectiveness of tax laws depends mainly on mutual trust between the tax payers and the government, among many other factors. In levy and collection of taxes, this mutual trust is lacking between the government and the tax payers.

The unique feature of human nature is telling lies. We invent them and gloss over them. We have this ability to invent which we should not dismiss. In the same way, tax professionals have this story telling ability, which we should celebrate for instead of scorning or deriding ourselves for possessing this ability. Remember, the success of taxation profession is dependent on this story telling ability alone. The tax professionals can interpret every provision of taxation in way to avoid a tax liability.

This is the reason for genesis of litigation and constant innovation of our tax laws by the law-makers.

So, whom we have to blame? Whether the government, tax professionals or tax payers?

My professional motto is "no deal is better than a bad deal"

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