Simpler is better

The report of the Parthasarathy Shome committee on tax administration reforms begins surprisingly with a quote from Robin Sharma’s The Monk Who Sold His Ferrari : “Dare to dream that you are more than the sum of your current circumstances. Expect the best. You will be astonished at the results.” The reason for this flourish presumably is that the authors of the report wanted their target audience, the tax administration community, to be influenced by it. However, our tax authorities are unprepared to either “expect the best” from taxpayers or to be surprised — pleasantly or otherwise — by the results. The new Income Tax Return form released by the IT department, while admittedly a vast step forward from the 14-page monstrosity initially notified in April and sensibly put on hold by Finance Minister Arun Jaitley, is but a small step forward in simplifying the process of filing taxes. The information sought from the payer remains extensive. With millions of Indians now travelling abroad, the earlier demand to disclose all details of foreign travel undertaken, with detailed expenses, created a huge public outcry. That has sensibly been done away with, and replaced with a requirement to disclose the taxpayer’s passport number. Many other mandatory disclosures removed from the basic form still exist as annexuresto be filled by assessees based on applicability.

The point is that while the revised forms exhibit a new and welcome sensitivity to public opinion, they are still a long way from being truly customer-centric. While no one disputes the need to pay taxes, it is pointless to make this needlessly complicated. The new forms, for instance, will continue to force most taxpayers to seek professional assistance for completing them. The approach is still one of ‘disclose first, we’ll decide applicability later’. This is a far cry from what the Shome Committee had suggested: that individual taxpayers should get a pre-filled tax return from the government, which they can either accept or adjust. This is not as futuristic as it sounds — many countries, including Sweden, Denmark, Spain and even Singapore, in a limited way, are already doing this. Starting the process with salaried taxpayers — who constitute the bulk of tax return filers, and whose tax is already withheld at source — should be relatively easy, since the authorities already have details of income, tax savings and exemptions for such assessees.

While the department does not disclose any statistics about assessees, former finance minister P Chidambaram, in his Budget speech in 2013, had revealed that only 42,800 out of a total of 3.24 crore assesses had a taxable income of over ₹1 crore. This is a shockingly low number. Simplifying the processes should go hand in hand with attempts to make the base rise significantly.

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