The government is working on offering pre-filled Income-Tax returns (ITRs) using the TDS data available with the Income-Tax Department from firms who deduct tax at source from their employees, and banks and other agencies.
Shome panel:
- The Tax Administration Reforms Commission appointed during the UPA government’s term under Dr Parthasarathi Shome, had suggested that pre-filled tax returns be provided to all individuals with the option of accepting the return or modifying it suitably.
- In this background, the government is now planning to offer pre-filled Income-Tax returns using the data available with the Income-Tax Department from firms who deduct tax at source from their employees, and banks and other agencies.
Advantages of the Idea:
- Once this starts, details such as income, income sources, and personal details would be filled up by the I-T department. The user would need to endorse the form, which will save their time. This would also enable the government to process it faster.
- Introduction of pre-filled tax returns is in line with global best practices.
- Besides, pre-filled forms could be a potentially enabling measure to foster a tax regime based on 'trust'.
Concerns articulated by critics:
- It may be too early to migrate to this simplified system because of information asymmetry. Unlike in the United States or United Kingdom, the Department may not have access to full information on all the sources of an individual’s income.
- And if the taxpayer is made aware of this asymmetry, the chances of evasion of tax or non-compliance are bound to rise higher. Thus, it could be counterproductive for the Department.
- It is not required as Tax compliance, or the voluntary filing of tax returns, has improved over the past decade.
- Of the 6.84 crore I-T returns filed in 2017-18, e-filings were 6.75 crore. With over 98% e-filings, India is ahead of the United States, where this number is below 90%.
- And as the country has moved to a Naya Saral, scrutiny of tax returns is now less than 0.5% of all returns filed.
Way ahead: Lessons from UK
- On compliance, the Shome Committee said that Progressive assimilation should be not only through education, but also through increased risk perception regarding the likelihood of penalties being imposed.
- Thus, India can choose a middle path by learning lessons from UK.
- In the UK, Her Majesty’s Revenue and Customs offers an automated assistant to help taxpayers.
- Also, the UK Revenue Department’s tax delivery services are reflected in its charter of rights and obligations. The Charter says it promises to provide efficient service to the taxpayer. In return, it expects from taxpayer’s, reciprocal honesty and respect for tax officials.
Other initiatives by Government of India: Integrated E-filing & Centralized Processing Centre 2.0 Project
- Recently, The Union Cabinet has given its approval to expenditure sanction of Rs.4,241.97 crore for Integrated E-filing & Centralized Processing Centre 2.0 Project of the Income Tax Department.
- Key objectives of the project: Faster and accurate outcomes for taxpayer, enhancing user experience at all stages, improving awareness and education through continuous engagement and promote voluntary tax compliance.
- Benefits:
- The move will help in bringing down the income tax return (ITR) processing time to one day from the present 63 days and hence speed up issue of refunds to the tax payers' bank account directly.
- It will also help in improving tax payers' awareness and education through continuous engagement.
- Implementing agency: This project of the Income Tax Department will be implemented by “IT major Infosys”.
- Budget: Union Cabinet has sanctioned an estimated ₹4,241.97 crore for the project.
- Implementation duration: The project is expected to take 18 months to develop and three months to be tested before it is implemented.
https://indianexpress.com/article/explained/simply-put-itrs-pre-filled-with-trust-finance-ministry-taxes-income-tax-returns-tds-5549129/
