New breed of consultants

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Appointment of a Tax Return Preparer will result in another tier of authority

FILING OF RETURNS: A cumbersome exercise
FILING OF RETURNS: A cumbersome exercise

Every Finance Bill makes reference to widening the tax base and simplifying the process of assessment. While in some cases the Government has been successful, often such attempts have only lead to more complications. Interestingly, a new provision in Section 139B, as proposed in the Finance Bill, 2006, deals with a new concept, of submitting income-tax returns through the Tax Return Preparer (TRP).

The impetus for this seems to be that filing I-T returns, which is the starting point for the process of assessment, is a difficult exercise. Most individual assessees need advise on this. Filing of returns in India, unlike elsewhere in the world, is time-consuming. Enclosing relevant annexure and supporting papers is a mammoth task. Often, some legitimate claim or deduction is either forgone or disallowed because of shoddy paperwork and improper filing of returns.

The process envisages that the TRP be authorised to affix his signature on such returns and that he/she be an individual other than the person specified in Section 288(2) of the Act.

There will be clear guidelines and conditions on who shall qualify to be a TRP, the code of conduct for the TRP, and so on, and the duties/obligations of the TRP will also be spelt out.

This `novel' scheme will result in another tier of authority/interface between the assessee and the Department. One would have thought that the return form should have been condensed and simplified to facilitate the taxpayer to do the job on his own. Instead, what is proposed is a new breed of consultants who will do the consultative job now being performed by accountants/lawyers.

The best way to improve taxpayer service is to make the process as user-friendly and simple as possible. The proposed appointment of a TRP is an admission of the fact that the process is complicated and, therefore, another breed of consultants is required to do the job. This will send out wrong signals, particularly when the thrust is to rope in more assessees and improve the quality of returns being filed.

One has to wait and see if the TRP will be held accountable for wrong filing of information. Will they represent assessees before the appellate authorities?

While advanced countries have already moved to online filing of returns, the issue that is still being grappled with back here is who is competent to file the return of income. This is not a step in the right direction, and definitely not a proposal which will simplify matters.

For instance, why should the scheme suggest that a TRP should be a person other than those designated in Section 288(2) of the Act? Over time accountants have gained the required expertise and knowledge to deal with tax matters. Where is the need to conclude that they are not competent to be TRPs?

Such a proposal has raised fundamental issues and needs to be addressed at the earliest. The new scheme comes into effect from June 1. One hopes that the proposal is not taken to its logical end. Instead, attention should be given to simplifying the return of income itself.

(The author is a Chennai-based chartered accountant.)

R. Anand

(This article was published in the Business Line print edition dated March 4, 2006)
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