The Unending Sufferings of Taxpayers and Professionals

A neighborhood provision store owner in Roorkee, RM Nautiyal, often used to say, ‘Government is always a partner in your business, a partner asking for its share of profit as tax when there is profit, but if you are in loss, the government will not be your partner in the loss. So, if you want to do business, you must earn a profit. This profit is for you as well as your nation as the tax money which will be used to fund many things. As a businessman, one must be proud.’ He was a positive man, who died in 2012. He wanted to do good for his family, his nation, and stakeholders in his business. Sometimes I wonder what his reaction would have been on the current tax regime in our nation, where government, a stakeholder in every profit-making business, is the reason for the losses by businesses due to harsh tax provisions and wrong policies and decisions. Just because someone with the attitude of a defense minister has been given the charge of the finance ministry.

Now, one may think this is an exaggeration. But suppose you owed your neighbor Rs 1 lakh for some business transaction, and his elder son, 37 years old and working in the same business, came to you asking for repayment. Being an honest man, you simply paid the amount and took a receipt of the same. In the evening, if your neighbour comes to your shop and asks for payment, you show him the receipt and ask him to collect the payment from his son. Very reasonable, right? Now replace your neighbour with the current government. The government threatens you to block your input tax credit, suspend your GST registration and put you in jail if you do not pay the same amount. What will a small businessman do? He will pay the amount, right? This is just a simple provision of GST, at least it’s simple for the government. If you buy something on an invoice, you have a legitimate e-way bill and you have paid your supplier the amount as per the invoice. However, since he has not paid the GST on that invoice, you have to pay the same amount to the government a second time! Even if your supplier pays the amount later, you cannot get your money back. This is a tact that explains how the finance ministry is showing huge increases in GST revenue. This government is collecting tax twice. Does this really increase the GDP? No. Does it help businesses grow? No. Does it punish the wrongdoers? No. This rule is made on the spurious logic that if someone is doing wrong, he need not be hassled, but if you are an honest taxpayer, you must pay twice.

This is just one of the absurdities in the current tax system. Retrospective law amendments, non-working portals, long due refunds, denial of refunds in GST, notices for not filing GST returns before the due date are the new normals for small businessmen. In the initial days of GST, the government claimed that you could file your GST return on your own. After four years, even tax professionals are unable to understand the complex structure of the GST Act. Endless amendments, the ever-new introduction of rules, rapid changes, retrospective changes in tax have all left the current tax system in a mess. A minister not having the basic knowledge of the domain and her unwillingness to listen is worsening things.

Finance Minister Nirmala Sitharaman, neither with a commerce background nor a professional degree in commerce or economics, is just a half PhD in economics (which she dropped out of in the middle of the course) is a very good material to govern a ministry that needs a strict governance model. We would love her as the defence minister again but is she really a good choice for the finance portfolio? A look back at her decisions, her successes and failures will make it clear.

GSTR-3B, which was initially introduced as a temporary return to pay the taxes as the GST portal was not ready on the date of launching of GST, has become the new permanent return. This form of return has its own problem and taxpayers were promised that it will be removed before December 2017, but we are filing the same in 2021. Today, replacing GSTR 3B is not even on the to-do list of the finance ministry.

Former Finance Minister, the late Arun Jaitley, had introduced compensation cess on some products, which was said to be a temporary measure to balance the revenue stream. Now, this temporary cess is a new permanent cess and no one is talking about replacing or scrapping it.

A GST return does not allow you to amend clerical mistakes even after four years of the introduction of GST, which was promised the very first day. This is when the finance ministry went on record to claim that some orders had been issued by the oversight. There are many instances where the government has introduced an order more than once because there was some mistake in the first attempt. So, a mighty government having the whole administrative machinery at its disposal can amend its order but not a normal taxpayer. That’s the new normal.

Retrospective changes in the law are very normal now. Retrospective laws are the ones that are applied on dates in the past as the term suggests. It’s like in 2021, the government decides that vehicles should be driven on the right side of the road and applies it from the beginning of 2017. Will you be happy to pay the challan for wrong driving for the past four years? Normally, retrospective changes are given to give relief to taxpayers, but this government is not bound to honour this rule for reasons known best to itself.

Keeping inflation in check is another duty of the finance ministry, where this ministry has failed miserably. Despite the decline in oil prices in the international market, oil prices are increasing by leaps and bounds in the domestic market because the government needs taxes to show the higher figures of collection. The monthly budget of the middle and lower class has increased by approximately 40% due to double-digit growth in retail inflation. But the government is sleeping on this issue.

The new income tax portal, introduced as a measure to ease doing business, is unable to work even after two months of the launch. After the launch of the portal, professionals were asked to submit many forms and returns on paper because the portal was not working. RIP Digital India. This is the first time in Indian direct tax history that on the formal due date of filing of ITR for individual taxpayers, which is 31 July, the CBDT is unable to provide forms. Still, you can enjoy the advertisements of a supposed huge success of the new income tax portal.

Recently, the finance ministry has introduced a scheme for GST taxpayers who were unable to file their returns due to the pandemic. This scheme does not cover small taxpayers who have their registration in the composition scheme. This scheme provides for the filing of GST returns but not for the restoration of GST registration which was cancelled for non-filing of returns. This scheme allows you to file the returns but doesn’t allow you to use the Input tax credit of the period. Half-baked schemes are the new normal.

Faceless scrutiny scheme is in the middle of nowhere. No one knows what will happen, appeals filed two or three years ago are still pending because the physical appeal redress system is abolished, and the faceless system is not working full-fledged.

Do our policymakers know exactly what they want to do? Do they have an intention to listen to stakeholders? Can we have hope for a fair tax system from a person not having knowledge of the domain and unwilling to listen to professionals? I think capital NO is an answer. They are only honest taxpayers who are going to pay the price of wrong decisions of their leaders as they always do.

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“Published originally on Sirf News on 06^th August, 2021”

Writer Profile:- https://taxguru.in/author/satishrrk/

FCA Satish Sharma is Practicing CA, Forensic Auditor, Master in Philosophy, Independent columnist in newspapers, Trying to make complicated subjects look simple.