oppn parties Tax Time Must Not Be Taxing Time

News Snippets

  • Supreme Court sentences Congress leader Navjot Singh Sidhu to one year rigorous imprisonment in the 1988 road rage case
  • Home Minister Amit Shah says rights should not be demanded before fulfilling responsibilities and that universities are no place to wage ideological battles
  • NIA court convicts JKLF chief Yasin Malik in terror funding case after he pleads guilty of all charges
  • A study backed by PM-EAC has recommended universal basic income and urban job guarantee and greater spend on social sector schemes
  • Supreme Court rules that the decisions of the GST Council are not binding on the Centre and the states, leaving the door open for states to levy further taxes
  • After sustained campaign by BJP MP Arjun Singh, the Centre today withdrew the jute price cap order, industry welcomes move
  • Akasa Air might postpone its July launch due to late arrival of aircrafts
  • Metro Cash & Carry decides to sell Indian operations. All major players, including Reliance retail and Amazon, are likely to bid
  • Local and global cues spook the markets on Friday - Sensex crashes 1416 points to 52792 and Nifty by 430 points to 15809
  • IPL: RCB crushes GT by 8 wickets as Virat Kohli returns to form with a well-made half century
  • Nikhat Zareen is world champion in flyweight category. Wins gold at Women's World Championships at Instanbul
  • Supreme Court uses its special powers under Article 124 to release A G Perarivalan, a Rajiv Gandhi assassination convict
  • Indrani Mukherjea, prime accused in the Sheena Bora murder case, gets bail from Supreme Court after 6.5 years in jail
  • Hardik Patel quits Congress, says top leaders distracted by mobile phones and state leadership busy arranging 'chicken sandwiches' for them
  • Anil Baijal resigns as Lieutenant Governor of Delhi citing "personal reasons"
Nikhat Zareen is crowned world champion in the flyweight (52Kg) category at the Women's World Championships in Istanbul /////// Supreme Court sentences Navjot Singh Sidhu to rigorous imprisonment of one year in the road rage case /////// Sunil Jakhar, who quit the Congress a few days ago, joins the BJP
oppn parties
Tax Time Must Not Be Taxing Time

By Sunil Garodia
First publised on 2021-09-13 07:05:04

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

The Supreme Court is spot on in saying that a tax regime must be well-defined and certain with no room for presumption to ensure compliance, maximization of revenue and minimization of litigation. The court said that "it needs to be observed here that in the taxation regime, there is no room for presumption and nothing can be taken to be implied. The tax an individual or a corporate is required to pay is a matter of planning for the taxpayer and the Government should endevour to keep it convenient and simple to achieve maximization of compliance." India ranks 37th out of 57 countries in the Tax Complexity Index.

In India, the problem is that even though the government is committed to tax reforms and there have been major reforms from the nineties onwards, the plethora of exemptions and deductions create a system that is complex, open to different interpretations and leads to litigation. Further, tax officials are given to take arbitrary decisions when allowing or disallowing these exemptions and deductions in various cases and nothing is certain due to the complex nature of the tax laws.

To make the laws simple, it is necessary to do away with all such deductions and exemptions. To compensate the taxpayer, the threshold for tax free income should be increased. The only problem in this changed system will be that savings will not be channelized in certain specified instruments like life insurance, public provident fund etc. which are attractive avenues for savings mainly because they provide tax breaks. But one thing is sure: doing away with exemptions and deductions will reduce complexity and ensure better compliance as well as reduce litigation.

As of now, the tax payer and the tax department are pitted as adversaries. This has to change. But this can only change, as the Supreme Court has rightly said, when the tax laws are simple and certain, leaving no room for presumption. The onus is upon the government to design laws that tax incomes in such a way that the taxpayer does not feel threatened and the tax officials do not treat them as cheats and fraudsters out to deprive the sarkar of its rightful revenue.