TIOL-DDT 152 · the untouched capture
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<html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399" size="3">TIOL-DDT 152</font><br> 07 07 2005<br> Thursday</b></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Collection of Information<br> Many happy returns</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The DGST wants a mountain of information to grant a simple registration certificate and this information has to be certified by a host of officers from Inspector to Commissioner. The one crore plus assessees are required to furnish a weekly report on their production, clearance and other related and unrelated activities. In addition to these, the Central Excise department spends most of its time in gathering compiling and submitting reports. The <b>IRS</b> now stands for Indian Reporting Service.<br> <br> The Kelkar Committee had recommended that <br> <br> <b>as a policy, no information should normally be asked for (from departmental officers or industry) unless it is being obtained in the prescribed returns from the tax payer. [Chapter 4 : Paragraph 9.2] <br> </b><br> The only relation the department has with their assessees is now collection of data; it could be revenue particulars, during the last day, last week, last fortnight, last month, last year and five years; it could be particulars of production and clearances; it could be replies to audit objections or it could be replies to queries from the Board. The field officers spend all their time in answering queries from the top or compiling statistical data. And usually any information asked from the field will finally land up on the lap of the assessee. The reports have a long and arduous journey up and down. <br> <br> Here is a classic case. Dr. Vijay Kelkar (yes the famous Kelkar) when he was Petroleum Secretary wrote a letter to the Finance Secretary regarding some problems of assessment of LPG gas cleared for domestic consumption. What the learned doctor had suggested to the Finance Secretary was that the field officers should be stopped from going ahead with SCNs and other actions till a decision was taken by the Ministry. The letter was marked by Finance Secretary to Chairman, CBEC. The Chairman marked it to a Member. The member sent it to all the Chief Commissioners for their comments. The CCs duly forwarded to the Commissioners and from there it went to the Divisions and finally to the Ranges. The Range officer gave it to the assessee who was supposed to give his comments which would have again travelled through the same route right up to the Finance Secretary. In this case by the time the letter reached the assessee, Dr. Vijay Kelkar had become the Finance Secretary! And what the assessee received was a photocopy of the Petroleum Secretary’s letter with the markings of all the great officers from Secretary to Superintendent. A senior officer tells me that the combination of computer, Xerox machine and fax is a lethal one to destroy the functioning of our offices. Any office with all the three machines is dangerous to the nation and will only create work for other offices. <br> <br> The funny part is that most of the information collected is not useful and not used and is hardly reliable. For example the whole of the morning of the sixth day of every month is spent by a Range Inspector in gathering revenue figures from the factories. This is compiled and communicated (often with a little cooking and a lot of spicing) to the Division and from there right till the top. What does any body do with this information? And if this information is really important, why can’t it be made mandatory for all the assessees to furnish this information by 10 am on the sixth day of every month?. Actually the assessee can be asked to feed the information to a system and by 11 am you can have the total revenue for the whole country available to the Finance Minister and every assessee and Inspector in the country. Why can’t we use those computers? This can be done every day also with no hassles. <br> <br> Or there can be another easy way of knowing the revenue collection. Only PLA payments are taken as revenue. You can ask the banks to give a consolidated report on the amount collected till the fifth day of every month and the Divisions can give a report on the refunds sanctioned and Lo and behold! You have the revenue figures. Is that all that simple? After all we have created so many posts in the name of cadre review and all these newly promoted officers should appear to be doing something!<br> <br> In many cases the information asked is already available with the authority asking for the information. But since it is easy to ask a subordinate and since facility of computer, Xerox and fax are available, it is always better to ask the lower authorities – not that anybody really has any authority. We have been experimenting with computerisation for the last; last many years; By this time we should have developed a good data base to answer any question. It is not difficult, I know a Deputy Commissioner who had captured all the data required into his system and he never asks his Range staff for any data. <br> <br> In the US they have a law against collecting information without the sanction of a specified agency and it is really difficult to get that sanction. We too should have something like that. Before we go in that direction, the first step is to withdraw that Xerox and fax machines from all offices. You can see the results. <br> <br> <font color="#006633"><b>Anti dumping duty - rescinded</b></font><br> <br> The anti-dumping duty on all imports of D (-) Para Hydroxy Phenyl Glycine Base, originating in, or exported from the European Union imposed by Notification. No. 71/2003–Customs, dated the 1st May, 2003 is discontinued and the notification 71/2003 is rescinded.<br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_062.htm">NOTIFICATION. No. No.62/2005-CUSTOMS dated 6th July 2005.</a><br> <br> <font color="#006633"><b>Excise gives way to Income Tax</b></font><br> <br> For the first time in the history of independent India, the direct taxes collections are going to be more than the indirect taxes collections. This is the situation in all developed countries. May be India can also join the elite club now. This information was given by Finance Minister Chidambaram while addressing the Chief Commissioners of Income Tax yesterday. He told the Chief Commissioners that <b>The investigative methods being adopted must graduate from the “blunt” instruments of search and seizure to the “sharper”, intelligent methods using information technology.</b><br> <br> <font color="#006633"><b>Chidambaram the role model in Pakistan<br> </b></font><br> The new financial year in Pakistan began on July 1st with big accolades to our Finance Minister Mr. Chidambaram. His Pakistani counterpart was obviously following Chidambaram very closely. Just look at this. From 1st July it is mandatory for banks in Pakistan to deduct a 0.1% tax on withdrawals exceeding Rs 25,000 through credit cards and ATMs.<br> <br> A CBR (Central Board of Revenue) circular explains that, in order to discourage cash economy, a new section 231A has been introduced, requiring every banking company to deduct tax 0.1 percent withholding tax at the time of making payment for cash withdrawals exceeding Rs 25,000. Cash withdrawals made on credit cards or from ATMs shall also be covered by this provision. No tax shall be deductible on withdrawals of Rs 25,000 or lesser amounts. But there are a few things our expert Finance Minister can copy from Pakistan.<br> <br> • subscribers of telephone, car owners, members of clubs and persons undertaking foreign travels have been absolved from the obligation of mandatory filing of returns. <br> <br> • a taxpayer deriving only salary income is not obliged to furnish a return of income. Instead, he is required to file a prescribed certificate from the employer. Following the policy of simplification and facilitation for the taxpayers, Income Tax Rules have been reviewed and in this context, an Annual Statement of Deduction of Income Tax from Salary has been prescribed which shall be filed by the employer, containing complete details of pay, allowances and tax deducted etc. In case of taxpayers deriving income from salary only, the prescribed annual statement filed by the employer will be considered as sufficient discharge of liability to file return of income on the part of individual employees.<br> <br> • where a taxpayer furnishes a complete return of income, it shall be taken for all purposes to be an assessment order issued by the commissioner on the date the return was furnished. <br> <br> • For the purposes of simplification of law and to provide relief, tax rates for salaried taxpayers have been rationalized. The following tax rates shall be applicable from the tax year 2006.<br> <br> 1. Where taxable income does not exceed Rs 100,000, <b>Nil. </b><br> <br> 2. Where taxable income exceeds Rs 100,000 but does not exceed Rs 200,000, - <b>3.5 percent of the amount exceeding Rs 100,000. </b><br> <br> 3. Where taxable income exceeds Rs 200,000 but does not exceed Rs 400,000, <b>Rs 3,500 plus 12 percent of the amount exceeding Rs 200,000. </b><br> <br> 4. Where taxable income exceeds Rs 400,000 but does not exceed Rs 700,000, - <b>Rs 27,500 plus 25 percent of the amount exceeding Rs 400,000. </b><br> <br> 5. Where taxable income exceeds Rs 700,000, <b>Rs 102,500 plus 30 percent of the amount exceeding Rs 700,000.</b><br> <br> Gen. Musharaf like our President and Prime Minister and unlike our Finance Minister was a salaried employee and perhaps has a soft corner for salaried employees. <br> <br> <b>Fringe Benefit – even employees exempted.</b> Certain organisations provide benefits to its employees for which they do not have to bear any marginal costs. For example, free or concessional passage provided by transporters, including airlines to its employees (including the members of their household and dependents); free or subsidized food provided by hotels and restaurants to its employees during duty hours; free or subsidized education provided by an educational institution to the children of its employees; free or subsidized medical treatment provided by a hospital or a clinic to its employees. These benefits were taxable in the hands of the employees as perquisites. Now these perks are exempted.<br> <br> I don’t know about Jinnah’s secularism certified by Advani, but I love the Pakistani tax laws- for one their Federal Excise Rules, 2005 is a far better and more simple code than ours incorporating excise and Service Tax. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/pakexcise.pdf">Click here to have a look at those rules</a><br> <br> <font color="#FF6666"><b>Until Tomorrow with more DDT<br> <br> Have a nice day. <br> <br> Mail your comments to</b></font> <a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font> </p> </body> </html>