Focus on the big fish

There has been the predictable ripple of instant protest over the introduction of a new income tax form that replaces the old 'saral' document""although the new document is no more difficult to understand for a literate person of average intelligence than the forms that have to be signed for getting a driving licence or a passport. Perhaps the stress levels associated with paying tax are so high that any excuse becomes reason to protest. The real reason for the instant unhappiness, though, is likely to be the greater disclosure that the new form requires""specifically, disclosures with regard to expenditure. But for the honest taxpayer, even this is more a problem with perception than reality. Most tax-payers do not make extensive high-ticket purchases in a year; and most of the purchases (if paid for with post-tax money) will have been paid either by credit card or by cheque. Consequently, there should be no great problem in retrieving information to provide to the taxman. What needs to be generally understood is that this is part of the general process of using digital information databases to track tax evasion. Honest tax-payers should welcome the effort, which is part of a broader thrust on switching to intelligence-gathering as the surer method for catching evaders. As an alternative to needless personal encounters with the taxman, this certainly recommends itself as it vastly reduces the scope for corruption and collusion.

However, one change recommends itself. The old 'saral' form should remain valid for all those declaring income lower than a specified threshold, and the floor for paying 30 per cent tax (Rs 2.5 lakh) suggests itself. This will leave out the bulk of those who file income tax returns, and will also help focus attention on the higher income categories where tax evasion is likely to be more prevalent.

Second, as a corollary to greater reliance on information-gathering as the primary anti-evasion tool, the finance minister should consider putting an end to some of the more draconian directives that have been issued in recent years, on property seizure, presumptive guilt and much else, all of which has made life more dangerous for ordinary people whenever they have the misfortune of encountering the taxman. The state should not be seen as a predator, and its agents should not have the freedom to indulge in gouging tactics; a more citizen-friendly approach recommends itself in the current day. The new tax form will gain much wider acceptance if the tax authorities announce that they will take significant steps to reduce if not stop such harassment, and that the new approach will be helped by the filling of the new form.

Finally, the Kelkar recommendation that income-tax assesses should not be answerable to a particular tax official in charge of his/her ward or circle, and that assessments of returns should be done at random across the country, should be implemented""so that a tax official in Coimbatore can scrutinise the returns of a tax-payer in Mumbai. This is possible with digital filing of tax returns, it reduces further the need for human contact, and also makes the process more transparent.