How CBDT Fails To Protect Bonafide Taxpayers and Uses Coercion through 139AA
This year, like many other taxpayers, I filed the physical copy of my returns by mail to the income-tax (I-T) authorities, with a copy to my assessing officer. For several weeks now, I have emails, as do many other taxpayers, with the subject line “Missed you this time. You can still file your income tax return. (Ignore if Filed).” The message asserts that “You have been a regular filer. However we could not help but notice that you were missing this year. So here is a little reminder.”
 
It is sad, if the I-T department has become a robot. 
 
Robots are not human. They cannot read the letters sent to them. They cannot take physical copies of tax returns on record. They cannot distinguish the genuine from the fake. The real from the unreal. The original from the benami. The truthful from the fraudulent.
 
This year the I-T department asked for a 16-digit number Aadhaar, whose demographic and biometric data is neither certified by anyone, nor has it been verified or audited by anyone and that which cannot be used as the basis on which to identify a taxpayer.
 
They decided that the permanent account number (PAN) issued by them was not enough to distinguish  genuine taxpayers, those who had been filing tax returns for years, from fraudulent ones. This is so, even though the income tax department does recognise that I have been a regular filer and that they have been emailing me certificates for paying my tax!
 
From the Income Tax website data there is a 15.7-fold increase in PAN from 2014 to 2019. This is not just unnatural, but alarming because it amounts to a 15.7-fold increase over what was done during 40 years in just five years. 
 
The use of Aadhaar as proof of identity has driven this phenomenal increase. From the data obtained from the Central Board of Direct Taxes (CBDT) under the Right to Information (RTI) Act,it is evident that 10,164,835 (over 10.1 million)PANs were issued with Aadhaar as proof of identity as against 16,298,382 (16.3 million)that used other documents to establish identity after the PAN was declared mandatory for transactions above Rs2 lakh in December 2015. 
 
The number of PANs issued with Aadhaar as proof of identity between demonetisation in November 2016 till March 2017 was 10,665,230 (10.6 million) in contrast to 8,021,160 (8.02 million PANs issued with other documents to establish identity. 
 
From March 2017, when the then finance minister, Arun Jaitley, introduced Section 139AA to the Income-Tax Act requiring a PAN-Aadhaar linkage, 17.07 crore PANs have been issued with Aadhaar as the proof of identity as against 26.3 million PANs issuedusing other documents as proof of identity. 
 
Most of the PANs issued using Aadhaar have no history of having filed any tax returns. They have not been certified, verified or audited by anyone to confirm that they belong to real individuals. These PANs do not establish genuineness of individuals or taxpayers.
 
By linking Aadhaar to PAN the I-T department is making genuine taxpayers indistinguishable from the benami taxpayers who obtained a PAN solely based on Aadhaar. If a fake PAN was used to create an Aadhaar, linking it back to the PAN does not make the PAN verified or genuine. 
 
There is no certified, verified or audited information that the Aadhaar brings to add any value to the PAN database. In fact, it treats the genuine taxpayers, who have been filing regular taxes, as frauds and those with no certified and verified data as valid and genuine. 
 
It is shocking that despite being alerted about this, the CBDT has failed to end the Aadhaar-PAN linkage, stop the use of Aadhaar for financial transactions, and to initiate inquiry into the massive fraud been perpetrated on the financial system and the people of India. 
 
Since the CBDT has not shut down the Aadhaar linkage, despite writing to them from 2018, I have written an open letter to CBDT in the hope that others too will be encouraged to do the same and lead to a change for the better.
 
 
(Dr Anupam Saraph is a Future Designer, Professor of Systems and Decision Sciences and an internationally renowned expert in governance of complex systems. He can be reached @anupamsaraph on Twitter.
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    m.prabhu.shankar

    11 months ago

    Excellent Article. Thank you Dr Anupam Saraph

    Nestle fined Rs 90 cr for not passing on GST rate cut
    The national anti-profiteering agency has slapped a Rs 90 crore penalty on FMCG giant Nestle India for not passing on the benefit of the goods and services tax (GST) reduction to consumers. It also asked Nestle to deposit the amount within 3 months.
     
    The maker of products, like Maggi and Kitkat, Nestle, "has denied the benefit of tax reduction to customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus profiteered."
     
    "Profiteered amount as determined as Rs 89,73,16,384 as per the provision of Rule 133(1) of the above rules as has been computed," the December 10 order said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    R.SENTHILKUMAR

    12 months ago

    Rob Peters' to pay Paul

    gcmbinty

    12 months ago

    It is the occasion to remind the Government of India and the fellow consumers that the profiteered amount determined as Rs 89,73,16,384 as per the provision of Rule 133(1) of the above rules as has been computed and cited in the report above in the December 10 order of Natiional Anti-profiteering Act should be paid into the Consumer Welfare Fund as the amount charged from the consumers. Fine or the Penalty must be in addition to the recovered value and paid into the revenue account of the GoI. Comments on my these comments are invited.

    Sudhir Mankodi

    12 months ago

    It is shameful that such brand of companies are cheating their customers and get away at the Board Level and AGM Level Meeting with impunity. Share holders of the company and the users of their product should shame them for such cheating. Why 3 months\' time given for paying penalty? Their cash flows must permit them to deposit the amount the very next day. Why CEO and CFO of the Company should not be sacked?

    REPLY

    gcmbinty

    In Reply to Sudhir Mankodi 12 months ago

    The beauty of this cheating their customers and getting away at the companies' Board & AGM meetings with impunity, and the money so recovered as an overcharged amount is paid into the Government kitty, not in the Consumer Welfare Fund.

    How Much Direct Tax is Paid from Your State to the Central Govt?
    Across the country, there are about 8.46 crore taxpayers and all states and union territories have paid around Rs11.13 lakh crore to the union government as direct taxes in FY2019. As expected, Maharashtra remains at top in both counts with its 1.31 crore taxpayers paying almost Rs4.25 lakh crore in taxes including corporate and income tax (I-T), reveals a reply in the Lok Sabha.
     
    Anurag Thakur, minister of state for finance, while responding to a question, says, over the past five years the number of taxpayers increased to 8.46 crore in FY2019 from 5.70 crore in FY2015. 
     
    Maharashtra's Rs4.25 lakh crore contribution to the central exchequer comes mainly from corporate taxes at Rs2.72 lakh crore followed by income tax of Rs1.41 lakh crore and Rs11,673 crore from other taxes.
     
    Delhi comes at second spot in terms of total tax collection. During FY2019, Delhi has paid Rs1.66 lakh crore as taxes to the central government. This includes, corporate taxes of Rs1.12 lakh crore, I-T of Rs53,580.70 crore and other taxes of Rs79.30 crore. 
     
    Another interesting aspect that comes out from this data is variation between two prosperous states, Delhi and Gujarat. As expected, Gujarat has more number of taxpayers at 74.80 lakh compared with Delhi's 43.04 lakh. However, in pure tax money terms Delhi is almost three times ahead of Gujarat. Delhi's contribution is Rs1.66 lakh crore, while Gujarat paid just Rs49021.5 core as taxes.
     
    Considering, Uttar Pradesh as the most populous states in India, it has second highest number of taxpayers. However, when it comes to its overall tax contribution, Uttar Pradesh at Rs27,687.9 crore is even behind Haryana, which paid a total tax of Rs29,881.2 crore to the central government. 
     
    Two states, Bihar and Assam has contributed just over Rs6,200 crore each to the exchequer. However, while Assam has just 13.15 lakh taxpayers, the number for Bihar is nearly double at 23.5 lakh. 
     
    Two newly separated states, Andhra Pradesh and Telangana have huge difference in number of taxpayers as well as their contribution. However, this may have to do with the fact that while both Andhra Pradesh and Telangana still share Hyderabad as their capital, contribution from this city might have be shown in Andhra Pradesh’s tax contribution records.
     
    West Bengal and Tamil Nadu have almost similar number of taxpayers at 56.21 lakh and 56.26 lakh, respectively. However, Tamil Nadu contributed more in the form of corporate tax at Rs43,663.2 crore compared with just Rs29,731.36 crore from West Bengal. Similarly, in terms of income tax, Tamil Nadu's contribution was at Rs30,515 crore, almost double than what West Bengal contributed at Rs14,903.7 crore.
     
     
    (*Collection shown under Major Head 0021 also includes the collection under Major Head 0023, 0024, 0026, 0028, 0031, 003
    **Other remaining Head of Direct Taxes Collection)
     
    Karnataka is at third place with a tax collection of Rs1.20 lakh crore. Here the difference between corporate tax and I-T is just over Rs10,000 crore. Corporate tax collection from the state was Rs65207.4 crore, I-T collection at Rs54037.3 crore and other taxes at Rs551.4 crore.
     
    Lakshadweep has paid lowest taxes of Rs19.44 crore, with major contribution from I-T at Rs16.55 crore and corporate tax at Rs2.89 crore.
     
    As per the reply, there are 1.30 crore taxpayers in Maharashtra, followed by 78.22 lakh in Uttar Pradesh and Gujarat at 74.80 lakh taxpayers. Delhi has 43.04 lakh taxpayers. Lakshadweep has lowest taxpayers at just 7,000 taxpayers while Mizoram and Sikkim have 13,000 and 27,000 taxpayers, respectively.
     
    Daman & Diu has 33,000 taxpayers, while Dadra & Nagar Haveli has 41,000. From the north east states, there are 41,000 taxpayers in Nagaland, followed by 47,000 in Arunachal Pradesh, 69000 in Meghalaya and 83,000 in Manipur. Andaman & Nicobar Islands has around 60,000 taxpayers, as per the records. 
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    COMMENTS

    m.prabhu.shankar

    12 months ago

    When you provide such data which are very specific to states, please provide us a view of high to low rank based on states so that we customers can quickly know where our state stands. From this its not possible to know the rank of West Bengal and Tamilnadu. Thanks.

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