`Cong Must Clarify Stand On Coalition'

CBDT says it is 1.4 per cent of collections, but what about the compliance costs incurred by taxpayers, asks T N Pandey

In a seminar organised by a chamber of commerce at Delhi recently, the chairman of the Central Board of Direct Taxes disclosed that the cost of collection of direct taxes works out to a mere 1.4 per cent of the total tax collections in a year. This is indeed commendable. However, to give a realistic picture of the expenditure, the quantum of expenses that are required to be spent by taxpayers, which in essence are compliance costs, is not taken into account by the tax department and, therefore, the cost works out to be so low.

 

Over the years, a number of functions of the tax department have been passed on to taxpayers who have to incur considerable expenditure in meeting obligations which relate to the tax department. For example, in a number of situations, audit by chartered accountants, over and above the statutory audits prescribed under other laws such as Companies Act, Cooperative Societies Acts, etc., have been prescribed under the income-tax law to ensure correct assessments. These include:

* Under Section 12A(b), for claiming income-tax exemption for incomes from property held by a trust or institution for charitable or religious purposes;

* Under Section 33AB(2), for claiming deduction concerning tea development account.

* Under Section 33ABA(2), for deduction relating to site restoration fund;

* Under Sections 35D/35E for getting deduction in respect of pre/post commencement expenses related to industrial undertakings and for amortised expenditure.

* Under Section 36(1)(ix) concerning expenditure for making the computer system Y2K compliant;

* Under Section 44AB in specified cases.

* Under Section 50 pertaining to computation of capital gains in case of slump sale.

* Under Section 80HH relating to profits and gains from newly established industrial undertakings in backward areas.

* Under Section 80HHA in respect of profits and gains derived from small scale industries.

* Under Section 80HHB concerning deduction in respect of profits and gains from projects outside India.

* Under Section 80 HHBA in respect of profits and gains from housing projects aided by the World Bank.

* Exemption of profit in respect o