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Spare the salaried
February, 09th 2008

In Japan, the salaried class is spared of the tedium of filing income-tax return if tax has already been deducted at source from such salary and the employee does not have any refund claim or any other source of income. High paid employees beyond the specified threshold are of course required to file their income-tax returns.

In India the same regime was in vogue for a very brief period some more than two decades ago but was curiously given up as abruptly as it was started. Employees constitute a special category for taxation because in their case, TDS is not ad hoc like in other cases it is the culmination of due process of assessment by the employer who is willy-nilly pitch forked into the role of the assessing officer so much so that the resultant tax computation is as meticulous and final as the one determined by the assessing officer.

And with the daunting prospect of cooling his heels behind the bars, no employer plays ball with his employee especially at the lower echelons to bail him out of the clutches of TDS.

The annual return of TDS filed by the employer in any case gives all the necessary details about an employee and his salary income. In the event, the tax administration would be saving itself a lot of unnecessary paper work and free its cloistered establishments of storage space besides sparing the employees of the rigmarole of filing income-tax return when nothing more remains to be assessed if it reposes complete faith in the tax collection role performed by the employers of this country.

Filing bulk return

The alternative regime obtaining under section 139(1A) pursuant to which an employer can file a bulk return on behalf of his employees has been a non-starter thanks to the lacklustre and unimaginative scheme made there under that supplies the nuts and bolts for its implementation.

For one, an employee wanting to avail himself of the scheme has not been spared of the burden to file a return he has to file his return to the employer who in turn would file a bulk return of all like-minded employees. Moreover, an employee with salary in excess of Rs 1.50 lakh cannot avail himself of this scheme. The employers too have not taken any extraordinary interest in the scheme in the absence of any compulsion.

There would be no need to issue a TDS certificate in respect of payments made for the period commencing April 2008. So much so, from the assessment year 2009-2010 onwards, one does not have to attach all the TDS certificates in evidence of tax having been deducted at source.

Indeed he simply cannot since he has not been issued one. While this is a sequel to the networking of the data base of the income-tax department, one wonders how an employee would file his return in the absence of such certificate given the fact that not all employees are conversant with the nuances of tax computation and they invariably have been setting store by the certificate issued by the employers.

This problem indeed could bedevil others as well. But the point is simultaneously with the abolition of tax deduction certificates, the need for filing of returns on the part of the salaried class should also have been abolished.

S. Murlidharan
(The author is a Delhi-based chartered accountant)
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