Friday, August 25, 2006

A plea for hassle free tax returns

During his budget speech on February 28, 2006, our Finance Minister announced that a scheme would be introduced and people would be trained to be 'tax preparors'. Not only would this provide employment but would also help us in filing our tax returns, if the matters were not complex. However, till date, this plan does not seem to have materialised.

This is analysed in my column, Law Street for the month of August, which appeared on August 25, in The Economic Times.

You may visit the above link for a better visual feel or view the entire column here:

A plea for hassle-free tax returns
[ FRIDAY, AUGUST 25, 2006 02:25:12 AM]

It has been over a month now, well almost. But I still recall the day that I took off from work to file my tax return. The news in my favourite daily newspaper that very day was a big let down. It appeared that the tax department was all set to go on strike on the last day on which one could file a tax return, merely because the government had permitted the friendly neighbourhood post office to accept tax returns.
The representatives of the association of the tax officials (well, a section of them), had screamed: "This move is outrageous; we are short-staffed because there are pending vacancies. How can lowly postal clerks step on our turf?"
This country needs honest tax paying citizens. Yet, when some taxpayer-friendly step is taken, like permitting a poor soul to walk around the corner and file his return, it is not well taken. It is in bad taste to hold people to ransom. I mean, if the tax department is short-staffed, surely it should have welcomed a move that would help ease its burden during peak time? Fortunately, all went well, the strike did not go through and yes both the tax department and the post office accepted tax returns. So it was a fairy tale ending after all.
Yet, this incident did leave me pondering. To be fair to this association of the tax department, they were concerned that the postal department would accept incorrect returns, including those where the much needed PAN was missing. But, isn’t there a solution?
Zenobia Aunty thinks there is a simple solution. Let nationalised banks and post offices accept tax returns. "I will not mind paying a tiny sum to the tax preparor (remember the grand scheme announced in the budget?). This tribe of men (tax preparors) stationed behind desks at banks and post offices will review my return, make sure all details are contained in my return and give me a chit of having filed my return. It will be so much easier for my creaking bones to go to the post office next door instead of to a far off tax office."
Did I hear someone say, e-filing? My dear, that is not easy. A corporate lawyer pal is undergoing treatment for baldness. The result of frequent revision in various e-forms that were required to be filed under the Companies Act. A plethora of bugs led to revision and re-revision in some cases and he was left tearing his hair out.
This bit of news makes me shudder. It now appears that India Inc will have to file its returns online and, yes sir, the forms have been revised. Believe me, it is so much easier to write about these things, rather than having to actually face the music.
Talking about e-returns has made me think about blogs. Yes, Indian bloggers and surfers were cut off from blog land for some time. A pal and scribe of this paper wrote that perhaps bloggers will learn from this and be more productive instead of concentrating on the ME factor in their blogs.
This prompted me to begin a search on whether any bloke out there in the world has actually tried to come clean regarding his taxes in the blog world. After all, PC would find this blog productive.
I actually discovered a very famous blogger, Julian Dibbell. Have you ever got entangled in the cyber web of massively multiplayer online games (MMOs)? Well, if you haven’t, let me explain. To gain greater glory in this game, players actually purchase virtual weapons, protective suits of armour, magic spells, power pills and what have you from other players on e-auction sites for real money.
Way back in June 2003, Julian wrote on his blog: "On April 15, 2004, I will truthfully report to the IRS that my primary source of income is the sale of imaginary goods and that I earn more from it, on a monthly basis, than I have ever earned as a professional writer."
True to his word he declared that his earnings from selling items procured while playing an MMO game — Ultima Online — were US$ 11,000. He paid taxes on the same.
But the IRS was perplexed with his query: what about the various virtual assets which he owns, such as protective suits of armour? Would these be subject to tax? He was given a non-binding view that such virtual assets even if they could be converted into cash, would not be taxed. It is only the cash which he actually pocketed that would be his income and that would be taxable. The IRS is still pondering over his query.
Unlike Julian, I am not approaching the tax department with complex virtual issues, but with just a plea. Let physical filing of my tax return be a simple, hassle-free affair. Give me the option of e-filing or paper filing. Give me the option of filing at a tax office or bank branch. And please give me this option, irrespective of whether I am an individual tax payer or a new entrepreneur or a corporate giant. Amen to that.

(The author is a CA. Views are personal)

1 comment:

Anjali said...

Nice to see Zenobia Aunty in an exclusive blog. Will you be writing on other tax issues, besides featuring your monthly column. I hope you will.