The Central Board of Excise and Customs has been empowered to frame a scheme for preparation and filing of service tax returns through service tax return preparers, similar to the tax return preparer scheme for income tax introduced in 2006.
The performance of the TRP scheme so far, however, indicates that it is in need of fine tuning - in terms of recruitment, training and remuneration - to become more effective and serve as a benchmark for the STRP scheme.
A TRP's role, for instance, is to primarily cater to the need of small income tax assesses who have simple returns to file and do not need, and may not be able to afford, the services of chartered accountants.
However, the number of TRPs as a proportion of the millions of small I-T payers is minuscule.
Till date, the government has appointed around 2,500-3,000 TRPs. It had aimed to recruit at least 5,000 in the first year. Recruitment for the second batch is yet to begin.
"Many people did not turn up for the examinations last year. Others did not pass," notes a Mumbai-based TRP, Arun Kumar (name changed on request). "Filing of I-T returns is not a very simple procedure. One has to fill anywhere between four and 16 pages. However, our training, which lasted for around three weeks (six to eight hours every day), was very sketchy, dealing primarily with the Income Tax sections rather than with the process of filing I-T returns. We have had to learn on the job. If you're not a commerce graduate or do not have a financial background, the learning curve is a bit steep," cautions Kumar.
The STRP proposal, modeled on these lines, is yet to come up with details regarding qualifications, training requirements, code of conduct, duties and obligations, and circumstances under which the authorisation can be withdrawn, notes Shailesh Seth, advocate (indirect taxes).
"The problem here is that service tax is just one of the subjects taught to students doing a CA or company secretary's course. STRPs would require far more training to deal with a complex subject like service tax," he adds.
The TRPs also note that the incentives provided and remuneration paid by the government "could be improved upon".
TRPs receive 3 per cent of the tax paid on the returns prepared and filed for every new assessee in the first year (subject to a maximum of Rs 1000), 2 per cent in the second year and 1 per cent in the third year and only Rs 250 for the returns prepared and filed for the old (existing) assessees. Most CAs, on the other hand, charge anywhere from Rs 3,000 upwards for filing I-T returns. Kumar, who is self-employed (as is mandated by the I-T rules) could file returns of 48 clients for the last financial year. This got him around Rs 9,000-10,000 since six to seven clients were new assesses from whom he got 3 per cent of their tax paid.
"I have yet to receive this amount from the government," he laments. The process is being speeded up, though.
During a recent discussion with the I-T department, some TRPs also suggested that government departments could be urged to use the services of TRPs; others asked for special counters for TRPs during the last week of return filing; some asked for loans to set up their office for this work, while others sought a list of books on Income Tax.
Responding to their concerns, Amitabh Kumar, director of income tax (PR, PP&OL), said: "...It is felt that there should be a Mentor/Nodal Officer in each city, who can help in coordinating various activities of the TRPs and solve their problems at the local level.... As regards increase in remuneration or charges for conveyance, these things have been noted but they would require amendment in notification. Any progress in this matter will be communicated through the website."
CAs, meanwhile, believe that STRPs may cover assesses who have an income of up to Rs 25 lakh (Rs 2.5 million) since service tax payers whose total taxable income (applicable to service tax only) does not exceed Rs 10 lakh (Rs 1 million) do not have to file returns.