CA Prarthana Jalan points out that the department’s aggressive action in launching prosecution even for trivial offenses is creating panic amongst taxpayers and leading to a state of “Tax Emergency”. She advises that the department should use the weapon of prosecution sparingly and only against habitual offenders and not as a tool to terrorize taxpayers
I had heard about National Emergency, had read about Financial Emergency and am witnessing “Tax Emergency” in front of my eyes. Indeed our country is in the state of “Tax Emergency”.
As during emergencies, no law is applicable except what the government decides according to its own sweet will similarly in today’s scenario also it seems Income Tax Act, 1961 is not applicable but just one law is applicable i.e “TAX Collection TARGET”
One does not need to pay legitimate tax on the income earned according to or as and when stipulated under the Income Tax Act, 1961 but one has to pay tax according to what the department demands through meetings, surveys, searches, notices, high pitched assessments etc.
Just one slogan is being enchanted everywhere TAX BHARO YA JAIL BHARO for astronomical irrational targets have to be fulfilled by the department of not only of collecting taxes but surprisingly also of launching prosecutions.
The common person who is earning income with much efforts, pain, sweat, intelligence, sacrifices, hard work has to bear the futile yet hefty cost of demonetisation, GST implementation failure, mounting Fiscal Deficit, excessive spending by the Govt, Banks scams, FDI’s slowing etc along with the growing inflation. Major tool left to compensate all these excessive burden is Income Tax Collection.
Prosecution notices for non payment of advance tax, return filing, TDS delay, non payment of wrong demands have become a common trend now. The difference between civil liability and criminal liability has been blurred. What should be the last resort to be taken by the department and in case of severe, intentional, deliberate, contumacious conduct is eventually becoming the first resort they are taking i.e to prosecute.
Penalty and interest are casual punishments now. Prosecution is the new ladder taken up by the department to achieve its target. For launching of prosecution dually helps department first it results in collecting of compounding fees and also helps in terrorizing not only the person against whom it has been initiated but also other people also.
If one does not pay the tax as and when demanded from him in the government treasury than he is a severe criminal and his place in the country is just behind the bars or else he could just take a loan and fly away from the country.
Thanks to the expeditious trial by the judiciary also in fast tracking the prosecutions launched by the Income Tax Department and in sending such people behind the bars so expeditiously.
Entrepreneurs, Start-ups, Businessman, working force should instead of gaining knowledge about their areas of expertise should also have profound knowledge about complex tax/statutory laws and also mastery in JAVA language for being able to cope up with the Govt. portals. E-filing websites might crash due to tremendous load and traffic but penalties and prosecutions would be launched for non payment of taxes and non filing of returns on the assesses.
In the year 1973-1974 there was a time when Top marginal rate was effective 97.75%. Retrospective amendment done in sec 115BBE by the government though to curb black money has brought the effective rate of taxation along with penalty to 77.25% , 83.25%, 107.25% and 137.25 % under different circumstances.
In today’s Tax Emergency Era, Judiciary pronouncements are only applicable on the professionals and tax payers and not on the department.
Ironically a common person has an exemption limit from income tax, annually of Rs 2.5 lakhs which approx. cost of running one minute of parliament as per 2014 data analysis. From 14 days the parliament has not functioned the common person’s hard earned money collected in form of tax has been wasted but in our country prosecution happens of only tax evaders and not of tax wasters.
So let us earn so that we can pay tax not only upto our legitimate level but as per the level that department decides for us or else be ready to stand infront of the magistrate for we have not taken money and flown away from this tax emergency nation yet.