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Taxpayers need administrative relief more than tax relief
November, 17th 2014

On 7 November, the Central Board of Direct Taxes (CBDT) issued a memorandum to principal chief commissioners of income tax, giving guidelines for implementing a non-adversarial tax regime, which has been promised several times by the finance minister. So, what are these guidelines and how do these affect the taxpaying public?

The CBDT has rightly recognized the fact that a non-adversarial tax regime cannot be achieved without concerted endeavour at each level of the tax department, particularly where public interaction is high. It has collated various instructions issued from time to time, besides giving further instructions. Officers and staff have been directed to follow the instructions scrupulously, and warned that non-adherence would be viewed seriously with disciplinary action initiated.

Honouring of appointments given to the public and not cancelling or postponing such appointments without any unavoidable reason is one of the instructions. Avoiding frivolous additions or high-pitched assessments without proper basis is another instruction. In cases selected for scrutiny, assessment on account of information received, either under the Annual Information Returns, from tax deducted at source (TDS) returns or other sources, scrutiny is to be limited to that information. Wider scrutiny can be undertaken only with the sanction of the commissioner of income tax in specified cases. Such cases should not exceed 25-30% of the total scrutiny cases.

Withholding of refunds due to mismatch of TDS data in the Tax Information System should be avoided by granting credit on the basis of evidence submitted by the taxpayers. Filing of appeals by tax authorities is to be done only if it is feasible on the merits of the case, and not automatically.

Most importantly, the CBDT has clarified that a regime where taxpayers grievances are not attended to in time would be considered adversarial. It has drawn the attention of tax officers to the time limits laid down under the Citizen’s Charter and under Centralized Public Grievance Redress And Monitoring System (CPGRAMS). Noting that pendency reflects poorly on the monitoring effort, the CBDT has directed supervisory authorities to ensure that grievances are disposed of within the specified time period.
The CBDT has also warned against the tendency to issue summons without adequate caution and due application of mind. It has directed supervisory authorities to ensure that summons are issued only in deserving cases and that summons should clarify whether a person has been called as a witness or in her own case, and the matter for which she has been called.

The CBDT instructions are welcome, in the sense that they seek to provide administrative relief to taxpayers. The problem in India has not been so much as regards the tax laws, but in the manner of implementation of these laws. The aggressive attitude of the tax department in recent years without heeding taxpayer rights has been the cause of much heartburn among taxpayers, and these directions of the CBDT should certainly help in this regard.

The concern, however, is as to how much of these instructions will really translate into ground realities. Many of these instructions have already been issued earlier, but there has been no follow-up to ensure that they are being adhered to.

The problem really is that there is no effective monitoring by senior officers of adherence to timelines by tax officers, nor is there an adequate grievance redressal mechanism for taxpayers. The concept of ombudsman created for addressing tax grievances, though good in theory, has not really been effective, with most of the posts of ombudsmen lying vacant for months.

It is essential that an online grievance redressal mechanism be set up, allowing a taxpayer to escalate the issue to higher levels online, instead of having to visit the tax department each time to meet superior officers for redressal of grievances.

The tax department has implemented a software system, Aayakar Seva Kendra, which allows tax officers to track various applications made by taxpayers. Unfortunately, this also has not helped in the absence of proper monitoring. Why not allow a taxpayer to make an application online, track its status online and escalate the issue online as well? Or, could there be a cell in the CBDT to which online grievances could be addressed?

One other major area of concern that remains unaddressed by these instructions is in relation to the redressal of grievances by the Centralised Processing Centre.
While there is a call centre, it merely addresses routine queries, and is unable to provide solutions for complicated issues or defects in the system. Can there not be a provision for escalating the issue to higher levels if the call centre is unable to address the problem?

These are the basic necessities for taxpayers, who are expected to comply with tax laws scrupulously and who are visited with penalty for even the most minor of violations. Can they not expect at least some means of redressal in case of inadequacy in the basic service that is their right? The CBDT has made a good beginning; it now needs to take this initiative to its logical conclusion.

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