Monday, July 24, 2006

Electronic filing of tax returns

Every year we do this. I mean filing tax returns. Is it fun, pleasure, caution, warning or frustration? Typical cycle goes like this. From Jan we keep getting calls for tax saving bonds. We get to hear many discussions around coffee machines about these bonds. Some desire to invest conservatively and few others go with the wind. Those invested go around finance desks to include their new investments. That part ends by end of March.

April is the time to declare the investments for next year. So based on previous year experiences we tend to improve it. But changes in Union budget leave us with lot of confusion. Then we need reviews on budget from finance gurus to make an optimum investment declaration.

End of June is the time for mails, to float around, about tax returns. This exercise is compulsory. Normally organization calls an agency for this sake. Those babus offer this service for hefty price. By Aug 15 we get acknowledged returns. We are expected to keep these papers carefully. Then there won’t be any activity till next Jan.

Year after year we do this job in almost similar manner. I didn't see any change in this process in last seven years. Taxes are for building nation. But lot us got concerns about proper utilization of funds raised from taxes. What I understand is most of the time this money goes to repay the loans we take from worldwide banks. I don’t think we are in a position to plan to do anything with our own money. Surveys reveal that only 10+ % of population pays tax.

There are several kinds of taxes that we pay. But the bulk out of them is income tax.
Take the case of Municipal Corporation or Road Transport Authority. We can pay property tax online as well Road tax. They streamlined their process so much that tax payer need not face bureaucratic hierarchy in their offices.

But what is lacking with income tax department (ITD)? I have following queries
1) ITD operates on much much higher volumes still they are unable to streamline the process. Do they lack money? Of course NO
2) Unlike customers of RTO department majority of tax payers are well educated and can take benefit of advanced means to file tax returns. But still why ITD can’t improve the process of filing returns?
3) Why can’t Income Tax Act be in colloquial language or even in plain English?
Why so much of legal nomenclature? So many inter links within sections?
4) When can we file returns ourselves online and can see the process of the file online?
5) Do we hold PAN card for IT department’s sake or for the sake of a loans from banks? What is the information that a tax payer can access with PAN? If it is mere a number for ITD reference but to be maintained by tax payer
6) There are penalties for those who evade tax, but what are the incentives for regular tax payers? Just because very few people pay taxes we cant expect anything of this sort.
7) Why not the whole process tax-payer friendly?

I think even before expecting our governments to do something productive out of funds collected from taxes, we should ensure that they provide hassle free means to pay it.

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