Home > Business > Budget 2003-2004 > Report
Get your PAN, refunds at the bank
Sunil Jain in New Delhi |
March 05, 2003 11:45 IST
This time of the year in 2004, if your income tax officer comes around asking for money to ensure your returns aren't selected for a 'detailed scrutiny,' tell him to go take a hike.
Do the same with your chartered accountant when he asks you for 10 per cent of your tax refunds as bribe to collect the amount.
By accepting the Kelkar recommendations on fixing the tax administration, Finance Minister Jaswant Singh has ensured taxpayers don't have to face these troubles anymore.
Today, there are five occasions when the tax officer, usually through your chartered accountant, gets to collect what economists call 'transaction costs' from you.
The Kelkar committee estimated this amount to be somewhere between Rs 5,000 crore (Rs billion) and Rs 8,000 crore (Rs billion) (Rs 50-80 billion).
Almost all of these have been plugged in the budget, and here's what you need to know about the where and how:
Tax Refunds: Estimates vary, but it's accepted that around 7-10 per cent of the Rs 15,000 crore (Rs 150 billion) of annual refunds is paid to expedite the process of refunding.
The process is slow as the 30 lakh (3 million) refunds are all processed manually, each requiring 4 manually-made copies, with 7-8 signatures of the tax officer.
Under the new system, this will be dispensed with, and much like dividend warrants issued by private firms, a simple statement will be issued to banks, giving details of the bank accounts of tax payers that need to be credited.
No Dues Certificate: Around 7 million of these are issued each year to those bidding for government tenders and going abroad, even as tourists.
Another big source of 'transaction costs,' this has been done away with.
Those quoting for tenders have to fill in their PAN, and this data will be given by all ministries/departments to the income tax authorities, making it easy to catch the defaulters.
Airports will be given details of tax defaulters, so tourists will not have to carry a no-dues certificate.
Scrutiny: A corrupt taxman can milk taxpayers twice for this, firstly by helping to ensure their name doesn't come up for scrutiny, and secondly by fixing the scrutiny report. Both routes have been sealed to a great extent.
For one, the cases to be picked up for scrutiny will no longer be selected by the taxman, but picked randomly by the computer.
The downside (for those averse to paying taxes) is that while today, only around 0.5 per cent cases are chosen for scrutiny, this may go up to 3 per cent.
Today, information on your expenditure, like the cars you bought, or the holidays you took, is not fed into the taxman's computer, making it possible for him to delete it from his records when your case comes up for scrutiny, of course for a fee.
Under the new Tax Information Network, all those who have to submit financial data - like hotels, credit card firms, automobile firms and jewellers - will have to provide it to branches of the NSDL depository on a regular basis, which will be fed into the taxman's computer.
All records will be made 'read-only' for the taxman doing your scrutiny, the bottomline being he cannot tamper with the data to oblige you.
PAN: Not a major source of bribes, but more a source of irritation. Every year, the income tax department gets around 50 lakh (5 million) applications for PAN cards, and is unable to process them because of the sheer volume.Now, these will be farmed out to agencies like banks and post offices to ensure speedier delivery of your PAN number.