The Hindu Business Line : PAC flays tax dept on `detailed' saral form plan

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PAC flays tax dept on `detailed' saral form plan

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`It will only reverse the process of simplification'

New Delhi , Aug. 11

The Public Accounts Committee (PAC) has flayed the Revenue Department that its recent proposal to revise the extant `saral' form into a detailed one requiring filling up a number of detailed information would only reverse the processes over the years in simplifying tax procedures and called for its review.

In its 29th report on status of improvement of efficiency through the "restructuring" of the Income Tax Department, tabled in Parliament by its Chairman, Prof. Vijay Kumar Malhotra, PAC said that it was surprising that even the salaried class including the pensioners are being included within the ambit of this detailed form.

May defeat objectives

Stating that the intention behind rolling out this new detailed form was meant to be marking and trailing tax evasion by locating the mismatch in income and expenditure of individuals, the PAC said that "converting and expanding the format and scope of the existing popular saral return form into a complicated and detailed form may not achieve the stated objectives".

This is because saral form was evolved over a period of time as a result of the continuing process of simplification and rationalisation.

Hence, the Committee apprehends that the proposed detailed form might discourage people from filing their returns, thereby defeating the very purpose of the revision made.

Review decision

As the new saral form might endanger the Government's efforts in providing a taxpayer-friendly milieu and bringing more taxpayers under the income tax net, it asked the Government to review its decision so that the process of simplification and rationalisation of tax procedure is not reversed. Since the scope and incidence of tax avoidance or tax evasion is minimal among the salaried and pensioners, the Committee said that the Government must particularly endeavour not to cause any hardship to the taxpayers under these categories.

PAC said in unmistakable tone that the efforts of the tax department ought to be specifically focused only on those categories/classes that are fundamentally evasion-prone due to the nature of their vocations.

Hence, as part of its restructuring, the tax department must reorient its efforts in a direction that is more purposeful and fruitful.

Impact

Giving details of how the tax department was likely to be well placed to deal with key areas of non-compliance consequent to restructuring, it said that this in turn was to have led to an immediate impact on tax revenues. Additional revenue of Rs 6,000 crore was likely to accrue from the impact on revenue from disposal of pending assessment. Besides, increase in the number of first appellate authorities and tax recovery officers were likely to contribute to an estimated Rs 7,500 crore to the revenues. The long-run impact by way of tax buoyancy during the post-restructuring period was likely to be even much more than the estimates made. It, however, said that there have been "significant deficiencies" in the implementation of the restructuring scheme.

The Committee's scrutiny shows that the revenue estimated to accrue during the post-restructuring period did not actually materialise. The results expected in key areas of income tax operations viz., assessments, appeals, refunds also proved elusive. It said the main contributory reasons for the growth in income tax collection during the post-restructuring period might well be due to increases in GDP, better economic conditions, and reduced tax rates and inflation rather than the measures outlined in the restructuring scheme as such.

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