Is shifting of Burden to Tax Payers & Facilitators/ Professionals by CBDT Justified?

THE BONDED LABOUR SYSTEM (ABOLITION) ACT, 1976 (ACT NO. 19 OF 1976) was introduced in India to abolish Bonded Labour way back in 1976.

Does this really helped to abolish Bonded Labour? Can we say definitely that Now NO BONDED LABOUR existed in India?

What will be the fate of legislation when even the government of India”s offices (Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, Income-tax Department) are devising New Ways of employing qualified Professionals as Bonded Labour. 

Just See the few Examples.

The most celebrated Scheme (TAX RETURN PREPARERS-TRP) of Central Board of Direct Taxes announced by Mr P Chidambram, the then Finance Minister had added thousands of Bonded Professionals with the Income tax Department.

A TRP, after four year of experience, is allowed to submit Income Tax Return for Individual and HUF Only and is not allowed to submit return for those whose accounts are required to be audited under any section of the Act.

What are remuneration to be paid to TRP?

A sum of Rs. 250.00 as Fee for each return filed/submitted by TRP  and 3% of Tax (Subject to maximum of Rs. 1000.00) in case of New Assessee. Meaning thereby a TRP can earn at the most Rs. 1250.00 per retun only.

Keeping in mind the Mind Set and Tendency in Profession a TRP is busy only in Peak Season of Tax Filing say From 15th July to 31st July (being due date u/s 139(1) to submit return). During the Peak 15 Days one TRP can at the most File 150 Returns (based on 10 returns per day, if She/he is available for full time and is fully loaded). If one add up another 100 return filed during Non-Peak Days from 1st June to 15th July a TRP at best can Earn Rs. 62500.00 from Old Assessee and another Rs. 10000.00 from New Assessee, assuming he is able to convince another ten person to bring them into tax Net and such new persons are willing to Pay a minimum of Rs. 33333.00 as tax (in order to qualify him for a maximum incentive of 3%) during first year of their return submission…an uphill Task.

Another instances are look how even more qualified professionals like Chartered Accountants and Advocate in Tax Practice are being treated as Bonded Labour without any remuneration being paid to them by the same Ministry of Finance.

Over the Years Income Tax Act has been amended and has prescribed so many compliance (46 in numbers to be precise) requiring certification from a chartered accountant. Meaning thereby that the Department itself does not want to spend its time and energies in scrutinizing the accounts of an assessee to dig out tax evaders but wants to depend upon the certificates issued by chartered accountants.

Professionals are been taken as granted to do the work which is otherwise the duty of the Revenue.

With the invent of electronic filling of return the burden of data entry has also been shifted to Tax Professionals. Departments Officers now have each and every record of a Tax Payers being provided by us at the click of mouse.

Glaring Examples how the department treat its so called partners in progress are the provisions contained in Chapter XVII-B.

A Deductor/Collector is liable to deduct/collect tax for and on behalf of the Revenue as provided in Section 192 to 195. As a responsible Citizen, He/she must do so and comply with the provisions, And deposit the tax so deducted/collected within due dates prescribed under the law.

But Just look, what happens, if he defaults in his duties :-

a) He is liable to pay interest on delayed payments……………..Justified

b) He is liable to be prosecuted if there is a willful evasion …..Justified

c) He is responsible for submission of Quarterly Statements with in due dates prescribed under the Law…… Justified

d) He is liable for a Fee of Rs. 200.00 per day for each day of default in submitting quarterly statements.

(This Fee has been increased from 100.00 a day w.e.f. 01-07-2012)

e) He is liable for penalty of Rs. 10000.00 to Rs. 1.00 lac for default in submission of quarterly statements.

f) He is liable for penalties in errors in submission of quarterly statements.

NOW JUST SEE how the department has cast so many obligations and there is no reward for complying, yet there are series of penalties, interest and prosecutions for non-compliance.

And Finally Tax Information Network Facilitation Centers (TIN_FC in short) were conceived with the invention of electronic filling of TDS returns way back in 2005. The department has slowly made it mandatory to e-file for almost all categories of deductors/collectors Now.

NSDL a pioneer in e-governance a concessionaire of income tax department for accepting and maintain data of all tax deductions and collections spread its wing by appointing Master Franchisee and allowing them to appoint Franchisee across India. At present there are thousands of TIN_FCs across India, catering to the need of tax deductors. Following table would apprise of how these TIN_FCs are paid for the services rendered by them.