There is resentment in almost all quarters of Indian taxpayers (including salaried class, businessmen and small traders) with taxation policies and tactics adopted by the Finance Ministry and the Central Government.
One of the tallest promises made by the Central government has been to curb tax terrorism. As part of its war against black money, central government had articulated the de-monetization policy about 18 months back. As a consequence, almost all of unaccounted cash got deposited into banks (belying government claims of hitting it hard) – that may be the only achievement. However, in reality, it appears that tax terrorism had got to new heights making things even worse prior to de-monetization.
The after-effects of de-monetization in terms of tax terrorism encompasses different dimensions and some of them are listed below:
· Tax payers were busy in filing the revised IT returns and unofficially settling the issues with Income Tax (IT) Authorities.
· Even though the laws are amended by empowering the IT Department to hunt down tax evaders post de-monetization – IT authorities are struggling in scrutinizing the revised IT returns due to acute shortage of manpower.
· There are murmurs that tax computation on unaccounted cash in the name of de-monetization raid became a boon to certain corrupt bank and IT officials to earn huge chunk of money– by unofficially settling the scores with tax defaulters/black money holders and aiding such people (owning unaccounted cash) to escape from the scrutiny of IT and other concerned authorities and let them walk away at liberty from getting punished for the violation of the laws.
· Tax evaders are taking advantage of existing multi-layered appellate hierarchy of courts to prolong the tax matter related cases for years in courts ensuring black money/ newly turned white money are safe in banks for an indefinite period of duration.
· There is also resentment that while the government made common man suffer in queues to deposit cash, withdraw Rs. 4,000 a day and so on or terrorizing entire population by enforcing linkage of Aadhaar with virtually everything in day-to-day life, scamsters like Nirav Modi are having free run looting the banking system at their will.
Instead of curbing tax terrorism, the central government is setting high targets to the IT department to amass taxes from the tax payers as a consequence there is tremendous upsurge in disputes amid tax department and tax payers.
Another scary aspect is that IT authorities are sometimes openly admitting that they do not dare to venture into no-go areas due to fear of violence threatened by the localities.
Not only individual taxpayers, but also corporate sector is not exultant with the government tax policies. In 2015, during the budget speech the Finance Ministry pledged to reduce the corporation tax from 30% to 25%. In 2018-2019, government reduced corporation tax to 25%.
But, here is the tricky part; every rule will come with an exception. Likewise, such tax reduction is applicable to companies with turn-over less than INR 250 crore. Government claimed that 99% of the companies are sheltered under this category. In reality, 90% of the corporate tax will be collected from the companies having turnover more than INR 250 crores.
The government successfully disappointed the salaried employees in previous four budgets without offering any real-time tax benefits and savings for salaried employees – letting the woes of such employees continue with no end.
Another noteworthy point is that Finance and Defence ministries are the originating point for the most of the scams. Most recent banking frauds are occurred under the scrutiny of the banking department (part of the Finance Ministry).
Not a single small businessman (even if honest taxpayer) in India seems to be happy with the introduction of GST.
Government seems to have lost the trust of common man long back the moment de-monetization and GST policies are backfired and did not yield the desired results.
The feeling is getting stronger that the government achieved nothing by implementing de-monetization and GST policy except purging medium and small business men out of trade, open the porthole for fraudsters to abscond overseas by alerting them via its actions and causing all sort of hardships to common men.
It is high time for the government to identify the imminent requisite to come out of the mindset that they have majority in the parliament and they can do anything without bothering about the concerns of the common man and realize the fact that people from all walks of life are very disgruntled with the government policy framing and methodology adopted for implementation of such policy.
Government should review its taxation policies and make swift modifications to the policies to ensure that such policies are citizens friendly and does not result in stalling/crashing the life of common man by causing all sorts of hardships and most importantly right contrivance is in place for strict execution of the revised policies benefitting public at large.
Bhumesh Verma, is a Corporate Lawyer with over 2 decades of experience in advising domestic and international clients, with a place in “The A-List – India’s Top 100 Lawyers” by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters. With Research and Inputs by Paruchuri Baswanth Mohan