The method of tax collection should be simple and it should
be in such a manner that the tax payer should not feel a pinch. The procedure
for collecting taxes should also be saral i.e. easy to follow. No doubt in
changing environment the tax gatherers are trying to implement the new
generation systems in the name of curbing the tax evasion. It should have low
cost to the exchequer as well as to the tax-payers. The tax collection should
be in a dignified manner.
Recently the introduction of new series of Income tax
returns is a glaring example of how our tax gatherers are bothered about the
tax-payers. They have on one fine day declared that now onwards these are the
forms to be filled up. These new series of forms are heading towards
electronic era. One way it is a good step. Sooner or later it was to come but
see how it is implemented. One has to file it with all the information asked
for and that to within the due date. No extension for filing of returns. There
are many mistakes in the forms and practical difficulties are faced by the
tax-payers. These new forms need a lot of information which require time and
programming systems to generate it, which are difficult to prepare in the
given time. Moreover, the accounts are to be given in the format asked for.
What was the necessity to thrust this on the tax-payers without even giving
them sufficient time? The main problem will come up when they will process the
returns. While even currently the credit for taxes paid are not properly
given. Now they are going to do it without documents hence there are more
chances of not getting full credit for taxes paid. The tax-payers will have to
suffer due to the fault of others. One fact remains that more than 90% of the
taxes are already collected by the Govt. by way of advance tax and TDS. Then
why such a rigid approach? In these circumstances the only way left with the
public was to knock the doors of High Court. In two of such Public Interest
litigation cases, one by the Hon’ble Gujarat High Court has ordered to allow
the attachment of documents with the returns and, in another case Hon’ble
Allahabad High Court has allowed to file old SARAL FORMS. These judgments
themselves clearly show that how difficult and unpractical these forms are.
The approach towards tax-payers should be changed while entering into the new
era.
Another method of tax collection is through TDS and TCS.
The TDS and TCS are to be done by certain assessees free of any changes and
even without appreciation. On the contrary the assessee has to follow the
stringent procedure and has to remember different timings for payments and
issue of certificates and quarterly filing of returns. Moreover, they are
liable for heavy penalties for non compliance and top of it the tax-payers
have to face disallowances even just for accidental delay. They even have to
face surveys. I can understand there may be many people evading the taxes but
the method of system of collection of taxes should be such that the evaders
should be punished BUT the genuine tax-payers are not harassed. The Government
in general and the Ministry of Finance in particular should look in these
areas which require improvement for gaining confidence of the tax-payers. I
suggest that there must be some incentive scheme for the tax-payers who are
deducting/collecting taxes at source.
In the process of outsourcing of certain procedural aspects
the Government has shifted the burden of the cost on tax-payers for allotment
of PAN, TAN, issue of PAN Card, and for accepting the TDS/TCS returns in
electronic media. All of us are aware that accepting returns, allotment of
PAN/TAN numbers and issuing PAN card are the obligations forming part of the
primary duty of the Government. However, the assessee is required to pay for
all these obligations of the Government. Why these amounts are charged from
the tax-payers when it is the duty of the Government to provide these
services? The collection of these charges are not lawful and against the
fundamental right of the tax-payers. The collection of direct taxes are
increasing year by year; then why such collection? I am sure that the courts
will take serious note of it and will strike down these unlawful collections.
The Direct Taxes are collected on the basis of income of
the assessee. The income is determined from the books of account of the
assessee. The writing of books for the businessmen and the people having
various incomes was initially for the purpose of own information and knowledge
and to find out at the end of the year what they have earned or lost during
the year. As time passed it became a base for the levy of taxes and thereafter
as the industry grew it became necessary for the purpose of having comparative
figures within the group, in the same industry and within various domestic and
overseas companies. Comparison was possible only if the companies follow
certain standard rules for preparing of their accounts. So as to fulfil these
requirements the implementation of Accounting Standards was made compulsory by
the Institute of Chartered Accountants initially for their members and
thereafter it was made mandatory for companies and then certain standards were
implemented even on non corporate assessees too.
These Accounting Standards are applicable for preparation
and presentation of accounts. The taxes are levied on the income as calculated
under Income-tax Act. This resulted in a conflict between them and it required
certain adjustments to reconcile the taxable income and the commercial income,
as per books of account, prepared on the basis of accounting principles and
Accounting Standards. We thought it fit to come out with a Special Story on
this topic; i.e., ‘Accounting Standard and Taxation’. The emphasis is given on
the selective topics to explain the impact of the Accounting Standards on the
taxable income. We sincerely thank Mr. Yatin Vyavaharkar for preparing the
design for this issue. Our sincere thanks to all the authors too, for sparing
their valuable time and sharing their rich knowledge and experience.
We hope this issue will be useful to our members in the
times to come.
