Will tax terrorism reach your home? Arun Jaitley wants to know where you went last year - Alternative Media Forum


Voice of Real Voiceless

Post Top Ad

Post Top Ad


Saturday, 18 April 2015

Will tax terrorism reach your home? Arun Jaitley wants to know where you went last year

New Delhi, R Jagannathan(Firstpost): The NDA came to power promising, among other things, freedom from arbitrary tax demands, especially those applied retrospectively. Finance Minister Arun Jaitley has repeatedly promised an end to “tax terrorism” from many fora. One presumes these promises were not meant only for the Vodafones and Cairns and Nokias of the world.

PTI image

A new initiative by his tax department could bring a milder version of “tax terrorism” into every home. The instrument of this new intrusion is the new income tax return (ITR) form for assessment year 2015-16 (which will apply to financial year 2014-15, for which returns have to be filed by July-end by individual taxpayers).

Gone is the avowed simplicity of yesteryear. Instead, in the pursuit of black money and curb non-disclosure of certain incomes, the taxman has sought so much information, that even ordinary salary earners will have trouble giving it to him. Any information missing in the ITR may draw notices and demands for explanations from the taxman, leading to new shocks for the middle class.

In an indirect way, Jaitley has also broken his promise that nothing will be retrospective in nature. The new returns will seek information pertaining to last year, since it is that return we have to file by July. The financial year ended in March, but the returns have to be filed this year, when no taxpayer may have kept records of the things she was not required to earlier. If at all, the new ITR should have been made operable from this financial year, so that people know they have to maintain details of certain expenses and incomes that the taxman wants to pore over.

For example, the new ITR requires you to account for your foreign travel and spends last year (2014-15). Among the details you have to mention are your passport number, the number of trips made, the countries visited, and the personal expenses incurred on your personal account. So if you went to took a gondola ride in Venice, or entertained family at the London Ritz, you will have to add it all up and tell Mr Jaitley’s tax sleuths about them.

Not only that. You no longer have the luxury of disclosing only one bank account – your salary account. You have to disclose all bank accounts regardless of whether they hold a minimum balance or lots of moolah. And you have to state the balance in those accounts as on 31 March.

And if you tend to make money from the swings and round-abouts of the stock market, and are maintaining a farm house to claim tax-free agricultural income, even if you have been paying tax diligently, Uncle Jaitley wants to know more about your activities.
According to Business Standard, “the new tax forms will seek information about the capital gains accrued through trading activity, with a detailed break-up of the long-term capital gains, short-term capital gains and the rate at which they are being taxed. Disclosure of agricultural income was required earlier, too, but now, forms seek a more detailed break-up, with information on expenses and unabsorbed losses for the past eight years.”

You can see where this is all leading to. Jaitley tax henchmen want to know if you are paying tax on interest earned on those bank deposits and how much you spent on rides in Disneyland (not in that much detail, but you will still have to note those sums in some little black book in order to give the taxman his number feast).

Once you give those details, the taxman will have endless opportunities to match incomes and taxes paid with inflows and outflows from bank accounts and other investment avenues, domestic or abroad.

While no one can complain about the government’s effort to curb tax evasion and identify benami property that lie at the root of much black money generation, the big crooks will find high-powered accountants and lawyers to maintain their books and explain things to the taxman. Perhaps with a little gift thrown in.

But for the ordinary office worker who took his family to Mauritius last year, suddenly the whole task becomes a fearsome exercise. What if a taxman leafing through your tax returns decides to send you a note asking how much you spent on your last trip? And was the trip undertaken to help your employer route benami investments to India, or purely personal. Since your spouse will also have to mention the trip in her ITR, the taxman has a way to cross-check.

You may be able to explain, but the purpose of tax reform should be to prevent such calls. Mr Jaitley’s new ITRs will ensure the opposite. Now, every income earner will have to worry about receiving a notice from the taxman for unexplained inflows or outflows.
Unless restrained, tax terrorism can go universal in India. At the very least, Jaitley will have made life more difficult for the taxpayer. Not the way to go.


No comments:

Post a Comment

Post Top Ad