Taxation Reforms 2021 for User Friendly Tax

 

To,    The Finance Minister of India    New Delhi   Dear FM,                    I am writing this to you on your open request through various forums asking citizens to give their feedback and suggestions to help reform taxation.  Though I am sure your Taxation departments are the biggest reformers since, they interact with lacs of taxpayers of this country every year and your department understands the shortcomings, pain areas, issues and solutions. I am an honest taxpayer, who never was a burden or liability on the Govt of India or a seeker of Govt Job. On the contrary, being self-employed has generated Jobs for fellow countrymen as and when I could but still feel that I and people like me are the biggest victim of British Raj Taxation Regime. On the other hand, lacs of rich farmers who have income in crore don’t contribute a single penny through Taxation. Well I know that’s a vote bank issue and common tax payer will continue to suffer but below are my Five Suggestions.  I will like to give you a quick example on Income Tax to start with to lay the foundation of suggestions. Example Suppose a person wants to pay Income tax of around 9 Lac. However the CA gives him the option of either paying 5 Lac or 15 Lac. Needless to say every individual including you will like to pay 5 lac and not 15 Lac. In the said process the government lost at least 4 Lac because the honest Taxpayer wanted to pay 9 Lac but Govt Policies came in the way. I am sure there will be such cases in Lac where the Govt doesn’t let honest taxpayers pay honest amounts. Now following things happened here 1.       The CA was able to take advantage of various Indexation and certain clauses which the honest taxpayer did not want to use but had no other option but to use.   Suggestion- Innumerable clauses and Indexation should be removed like our PM Mr. Modi had scrapped 1200 redundant acts and is scrapping another 1800. These unnecessary Acts and complex indexations become the source of corruption as it leaves many loopholes to exploit. Like we have Saral Income Tax Form similarly we should have simple universal index measures.   2.       From the above example, why these clauses were used and exploited because a taxpayer wanted to save unrealistic interest and heavy penalties to the tune of 4 Lac which wasn’t his fault but he wasn’t guided by his CA, which I shall be taking on later.   Suggestion: Government should give Incentives of 10-20% of tax rebate to the honest taxpayer which can be used by the taxpayer while filing next financial year returns. Instead of levying heavy penalties initially through Service Tax and now GST and IT, it seems these penalties have become a great source of income and addiction for the Govt which the Govt doesn’t want to do away. However, the Govt is not realizing, the crores of honest taxpayers who want to file honest tax are being discouraged from these interest and heavy penalties.    A quick Example: Govt penalties are quite similar to taking a consumer durable loan with monthly EMI of RS 1200. If EMI bounces the Emi Bouncing Charges will be around 700 with additional Penalty.  Which means a common man will have to pay an additional EMI because of the banking cartel which works in connivance with RBI.  Three years back I had put an RTI to RBI and RBI reply indicated that there is no restriction or regulation by RBI on bank for cheque Bouncing charges and levying Penalty.   3.       If one visits a doctor and the doctor doesn’t respond promptly or keep making excuses what will the patient do. The Patient will immediately change the doctor however, such privilege is not with the taxpayers who are always at the mercy of CA’s and Lawyers. One cannot simply shift from one CA to another who despite being reminded, chased and followed by honest taxpayers does not discharge his duty effectively. And many times an Honest Taxpayer has to bear the brunt of penalties and interests despite paying full fee to the CA for not doing his job.   Suggestions:  Don’t Punish the Taxpayer because of someone else's fault, if Taxpayer has all the evidence of chasing after CA and still not getting relief in filing tax, the taxpayer should not be fined. For a Taxpayer it is never easy to change a CA or a Lawyer, transfer books of accounts, explain everything again and hope that the new CA is not like the old one, which in all possibility would be. Rest how you need to deal with CA associations I leave it for you.   4.       For 20 Years a person has annual Income from 5 Lac to 10 Lac and then one year it crosses 50 LAC and with that gamut of additional taxes apart from 30% like 10 % cess surcharge and other details of all the assets and liabilities. This additional income could be because of some ancestral property sold or gains from the share market.  Do you think it’s right to ask the person for additional cess charges and seeking all the information, especially when for the last 20 years,  that self-employed or entrepreneur or professional was hand to mouth, the Govt never came to his rescue. Suggestions: 10 % cess and other details should only be charged from a taxpayer who has income above 50 Lac for at least Two years. 5.       Every Indian wants to pay tax especially the Self Employed, Entrepreneur or Professional who wants to pay all direct and indirect taxes.  Such people being self-employed under which ever category are unable to pay tax when an individual is in losses (they don’t have any fixed income like salaried), so the entrepreneur has two options, either to start making profits quickly which are not in his hands or to start mortgaging gold and other assets to pay tax. Or to let the tax interest and penalty accrue and spike until he cannot take it and sell off the assets. The asset which could have been used as Investment in his business has gone to the govt in form of interest and penalties. Which means the self-employed will never be able to resurrect his business. This is similar to bank who will give loan only to the rich and poor is a bystander, in other words, companies who can afford to pay taxes in time is lucky and the self-employed who is incurring losses and doesn’t have money to pay taxes get further subjected to penalties and torture.   Suggestion: Eliminate Penalties and charge nominal bank interest of 7 % because the person who is not paying is not paying because he has no money to pay and  not, he doesn’t want to pay.   I hope you will consider these suggestions seriously. I am also considering whether to write my name or not as under-signed as that is the fear of the tax department thanks to the redundant policies and powers given.   Dr. Kapil Kakar     ReplyForward