In your interest.
Online Personal Finance Magazine
No beating about the bush.
Income Tax authorities have denied information about I-T returns of 22 MPs, including Sharad Pawar, Naveen Jindal, Maneka Gandhi, Sachin Pilot, Jyotiraditya Scindia, Navjot Singh Sidhu, Beni Prasad Verma, Ajit Singh and Lalu Prasad Yadav and 20 MLAs. After suspending the hearing 27 times for over three years, the CIC has given the MPs and MLAs three weeks to file their replies
It often takes just one election victory of five years—for Members of the Parliament and Legislative Assemblies to get stinking rich, what with their wealth increasing a 1,000 times, in some cases.
According to a research carried out by the Association of Democratic Reforms (ADR), the Lok Sabha MPs (2004-2009) have had an average increase in assets to the tune of 289% or Rs2.9 crore per MP within five years.
As for the MPs from the Rajya Sabha, BJP has 14 out of 16 candidates who are crorepatis, followed by Congress with 12 crorepati candidates out of 15 candidates. “There is also the issue of conflict of interest,” says Anil Bairwal of ADR. “58% of the Rajya Sabha members are ‘crorepatis’ with flourishing professional practices, shareholding in media, infrastructure, hospitality besides paid consultancy and other engagements,” he adds.
Thus, Bairwal says, “Going by the swelling in the pouches of our MPs and MLAs in the 2009 elections, it is extremely desirable that their I-T returns are made public. The recent increase in the assets of Members of Parliament (MPs) portrays some figures which appear lopsided and doubtful. There are parliamentarians who have increased their assets more than one thousand times over while in Parliament. Furthermore, what is the foundation of this breeding money among the political parties, nobody knows.”
Bairwal has filled innumerable RTI applications in the relevant Income Tax offices of the 22 MPs and 20 MLAs, which he zeroed on, considering the increase in their assets between 2004 and 2009. His RTIs, which were filed in 2010 were stonewalled by all the respective Public Information Officers and Appellate Authorities. In fact, his second appeal with the Central Information Commission (CIC) was suspended 27 times until it was finally heard on 16 April 2013, a good three years later. Once again, three more weeks have been given to reply.
The prominent names in the list of 22 MPs and 20 MLAs whose I-T returns were asked for under RTI are Sharad Pawar, Naveen Jindal, Maneka Gandhi, Sachin Pilot, Jyotiraditya Scindia, Navjot Singh Sidhu, Beni Prasad Verma, Ajit Singh and Lalu Prasad Yadav.
Bairwal has asked for the following information in his RTI application:
1. Whether the MPs/MLAs who fall in your jurisdiction have filed their I-T returns for all the five years (2004-2009)
2. Please provide the years for which these MPs have not filed their returns
3. Please provide details of the -IT return & assessment orders for all the years for which they have filed.
Apart from the RTI application, Bairwal also separately requested all Rajya Sabha and Lok Sabha MPs to disclose their I-T returns in larger public interest. Says Bairwal, “Some of these MPs sent us their I-T Returns and insisted that we make them public on our website whereas others uploaded them on their own website. We also came across some MPs and MLAs who have already submitted their I-T returns along with the respective chief minister's office and the prime minister's office.’’ In all, 28 of them including Anu Aga and Ambika Soni have revealed their I-T returns – (see box below).
As per the press release issued by ADR on 16 April 2013 “Of the 20 MPs whose I-T returns were asked for under RTI, the details of only three MPs—Mr Baju Ban Ryan MP from Tripura East constituency), Mr Shafiqur Rahman Barq (MP from Sambhal constituency of Uttar Pradesh) and Ms Usha Verma (MP from Hardoi constituency of Uttar Pradesh) were made available by the Public Information Officers (PIO). The I-T returns of others MPs were denied under various sections, like 8(1)(j), 8(1)(d), 11(1) and 11(3) of the RTI Act. TheRTIs of seven MPs were transferred but lost in transit hence no information was available.”
At the CIC hearing, representatives of 10 out of 20 MPs were present. The public information officers who denied the information stating lack of larger public interest and the representatives of MPs/ MLAs were invited for the hearing. The bench comprised Information Commissoners (IC) Mr ML Sharma, Ms Annapurna Dixit and Mr Rajiv Mathur.
The three CICs repeatedly questioned the representatives of the MPs as to how disclosing of their I-T returns was not in larger public interest. They repeatedly referred to the Supreme Court judgment which made declarations of assets and other details mandatory at thetime of contesting elections.. However, no arguments were put forth by the Public information Officers of the I-T department who had initially denied providing the information stating lack of public interest, states the press statement of ADR.
Mr Bairwal argued that there is overriding public interest in I-T returns of the MPs and that most of the requested information was already in public domain as the total income filed in the latest I-T returns of all candidates have to be provided in their affidavits along with their nomination papers to the Election Commission of India (ECI).
Mr Bairwal stated during the argument at the CIC that, “the Supreme Court has deliberated in detail on this issue while directing the ECI to collect and make public the information on assets of the contesting candidates at the time of elections through affidavits. The Supreme Court of India had specifically noted through its decision on 13 March 2003 (Writ Petition No. 490/509/515 of 2002) that asking for asset details of the parliamentarians/legislatures does not invade the privacy of the individual.”
Amongst the arguments put forth by representatives of MPs, Mr Ajith Singh’s senior advocate argued “that if the MPs are considered public servants, the I-T returns of every public servant should be requested for; lawyers of Mr Jyotiraditya Madhavrao Scindia argued that any tax payer serves larger public interest by paying tax hence their personal information cannot be made available in the public domain; the representative of Kumari Selja when asked if he would be willing to declare his/his client’s I-T returns, stated that “rule of privacy will prevail” and “I am not obliged under law to declare my I-T returns in the public domain”.
The attendees included lawyers, chartered accountants and representatives of Mr Uday Singh, Ms Maneka Gandhi, Mr Sachin Pilot, Mr Dushyant Singh, Kumari Selja, Mr Beni Prasad Verma, Mr Ajith Singh, Mr Lalu Prasad Yadav and Mr T R Baalu.
The CIC has given three weeks’ time for the representatives of the MPs to provide a copy of their written submissions after which it will give its decision.
Says Mr Bairwal, “Tax returns of Parliamentarians are voluntarily being disclosed in countries like the US and UK. Presidential tax returns in the United States are available online. Like all other citizens, US presidents also enjoy the protection of their privacy, but they chose to release their tax returns publicly. Tax returns of Barack Obama, George W Bush and others are available online. (www.Presidentsusa.net). Their tax returns are open for public scrutiny and such sort of a transparency is truly commendable. Our parliamentarians should also do likewise as this will underline the faith of the citizens in the representatives chosen by them…”
|Those who voluntarily put their Income Tax returns in the public domain|
|1||Neeraj Shekhar||UP||Ballia||SP||MP LS||ITR|
|2||Sadashiv Dadoba Mandlik||Maharashtra||Kolhapur||IND||MP LS||ITR|
|3||Abhijit Mukherjee||West Bengal||Jangipur||INC||MP LS||ITR|
|4||Mirza Mehboob Beg||J&K||Anantnag||J&K National Conference||MP LS||ITR|
|5||Bijoy Krishna Handique||Assam||Jorhat||INC||MP LS||ITR|
|6||Arnavaz Rohinton Aga||Maharashtra||NIL||Nominated||MP RS||ITR|
|7||Raju Anna Shetty||Maharashtra||Hatkanangle||Swabhimani Paksha||MP LS||ITR|
|8||Dr Ajoy Kumar||Jharkhand||Jamshedpur||JVM||MP LS||ITR|
|9||Mandagadde Rama Jois||Karnataka||Karnataka||BJP||MP RS||ITR|
|10||Dinesh Trivedi||West Bengal||Barrackpur||AITC||MP LS||ITR|
|11||Vilas Baburao Muttemwar||Maharashtra||Nagpur||INC||MP LS||ITR|
|12||Baishnab Charan Parida||Orissa||Orissa||BJD||MP RS||ITR|
|13||Tathagata Satpathy||Orissa||Dhenkanal||BJD||MP LS||ITR|
|14||Baju Ban Riyan||Tripura||Tripura East||CPI(M)||MP LS||ITR|
|15||Sudip Bandyopadhyay||West Bengal||Kolkata Utter||AITC||MP LS||ITR|
|16||Subodh Kant Sahay||Jharkhand||Ranchi||INC||MP LS||ITR|
|17||Pratik Prakashbapu Patil||Maharashtra||Sangli||INC||MP LS||ITR|
|18||Mahadeo Singh Khandela||Rajasthan||Sikar||INC||MP LS||ITR|
|19||Ajay Maken||Delhi||New Delhi||INC||MP LS||ITR|
|25||Rajkumar Sharma||Rajasthan||Nawalgarh||INC (contested on BSP ticket)||MLA||ITR|
|27||Murari Lal Meena||Rajasthan||Dasua||INC (contested on BSP ticket)||MLA||ITR|
|28||Hema Ram Choudhry||Rajasthan||Gudamalani||INC||MLA||ITR|
(Vinita Deshmukh is the consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)
The Delhi High Court, while giving its judgement on the problems encountered by the public in the matter of assessment of tax, said, “Rejection of TDS or failure to get credit for TDS puts the tax payer through needless harassment, inconvenience and costs. The problem, being systematic and institutional, has to be addressed on a general scale”
One more financial year has just come to an end and with that the job of collecting all income certificates, TDS certificates, etc has just begun to enable us to file our income tax (I-T) returns before the end of July 2013. Tax deducted at Source, or TDS for short, has been a pain in the neck for all middle class assesses and despite repeated representations, the government has not agreed to do away with the TDS, particularly in respect of bank deposits.
As per the amendment to the Finance Act last year senior citizens are not required to pay any advance tax before the close of the year, but need to pay appropriate tax, if liable, before filing the tax return. But this is only a half-hearted measure, as the government has not waived TDS even for senior citizens even though they are not required to pay advance tax, thereby putting them into great inconvenience.
Problems encountered by tax paying public:
Recently, the Federation of Tax Practitioners had filed a writ petition in the Delhi High Court seeking remedies for some of the following problems encountered by the public in the matter of assessment of tax.
1. While banks are prompt in deducting tax while paying interest, they do not bother to file TDS returns promptly due to which the tax deducted by them is not reflected in the Form AS 26 of the individual tax payer appearing in the Income Tax website, consequent to which the tax department sends notices to assessees demanding payment of tax.
2. Even if the TDS return is filed by banks, many a times, it is wrongly filed resulting in Income Tax Officers (ITOs) refusing to give appropriate credit to assessees for the tax paid by them, despite filing record of tax payments.
3. The Central Processing Unit (CPU) of the Income Tax department at Bangalore has, in respect of those assessees who have filed returns on-line, started issuing notices of late to assessees on the basis of wrong entries made in the income tax website showing tax due in respect of earlier years, and asking them to get the same rectified through their ITO, if it is not due from them. This is causing avoidable harassment to all those assessees who have no dues outstanding of earlier years and have a clean record of tax payment.
4. Even in such cases, when the assessees seek rectification of tax dues wrongly shown under their name, the ITOs do not respond promptly to such requests resulting in the CPU unilaterally adjusting the refund due for the current year to the non-existing dues shown as outstanding for earlier years, depriving the assesses the rightful refund due to them.
Judgment of the Delhi High Court providing succour to tax payers:
Surprisingly the tax authorities have admitted to the Delhi High Court that the data uploaded in their website and relied upon by their Central Processing Unit has errors and mistakes. According to this data a sum of Rs2.33 lakh crore was due and payable as past arrears (payable before 31 March 2010) by the taxpayers.
The high court in its judgment dated 14 March 2013, observed as under:
“The magnitude and number of taxpayers adversely affected can be appreciated from the past arrears figure of Rs2.33 lakh crore, which the tax authorities accept may not be correct,” states the Delhi HC order.
“This effectively means that 23 lakh taxpayers were denied refund or have been refused full refund on account of past arrears,” observes the Delhi HC order.”
The court further said, “Rejection of TDS or failure to get credit for TDS which has been deducted and paid hurts the tax payer and puts him through needless harassment, inconvenience and costs. The problem, being systematic and institutional, has to be addressed on a general scale.”
The court has, therefore, in its judgment has given directions to the tax authorities to ensure compliance of the following instructions for the benefit of the public:
If a tax payer faces any of the problems mentioned above, it is advisable to take up the matter with the jurisdictional income tax officer referring to this judgment of the Delhi High Court and seek redress if you find that the tax department is at fault and require remedial action.
(The author is a banking analyst and he writes for Moneylife under the pen-name ‘Gurpur’)
By ushering the end of the special status, the normally resident Indians, masquerading as pseudo NRIs should be stopped from holding accounts in tax havens
Washington-based International Consortium of Investigative Journalists has just put out an exposé on international money laundering, with the names of as many as India’s 612 top industrialists, professionals, politicians (including two MPs) and others. At a subsequent news conference finance minister P Chidambaram said: “Yes. We have taken note of the names and inquiries have been put in motion in respect of the names that have been exposed.”
News reports also mention that among the names listed are some NRIs who make use of tax havens while others have denied having accounts abroad.
Some overly rich NRIs, included in the listing, have been found to grossly abuse the special tax and foreign exchange status granted under Indian statutes. It is this misuse that needs to be curbed effectively by revisiting the facilities, more particularly in the light of the currently prevailing favourable circumstances in India that justify the changes.
It needs to be pointed out here that the term “Non-resident Indian,” (NRI), nowhere finds a place in Indian legal lexicon. It is not explicitly defined inasmuch as it is inclusively indicated both in the Indian Income Tax (I-T) Act, 1962 and the Foreign Exchange Management Act, 1999 (FEMA).
Section 6 of the I-T Act considers any “a person as resident in India” as one who has a stay in India for more than 182 days. Section 2(v) of the FEMA, lays down “a person resident in India means a person residing in India for more than 182 days... but does not include any person who has gone out of India or who stays outside India, in either case for taking up employment outside India, or for carrying on outside India a business or vocation or for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period.” The same criteria conversely apply for anyone who has come to and stays in India.
It must be pointed that initially, the tax and exchange benefits were primarily extended to encourage homeward the monies earned by the millions of Indian workers, professionals, salary earners—comprising Indian Diaspora spread far and wide across the globe. More particularly at a time when India was facing very acute shortage of valuable foreign exchange to pay for essential imports to bridge the large forex gaps.
The NRIs had then all along preferred to park their funds with the banks abroad as they considered the banking system in America, Europe and Gulf countries to be far safer than that those in India, even when these banks paid relatively lesser rate of interest and charged them for maintaining the accounts. Banks in the Gulf insisted on maintaining large minimum balances in savings accounts and made it imperative for small time depositors to remit most of their earnings through exchange companies to their families back home.
Then came the financial meltdown with a collapse of banks, big and small, in the US and its cascading effect in the Eurozone, particularly Iceland and Cyprus, the end of the oil boom in the Middle East, wars in Kuwait and Iraq and collapse of the Dubai real estate boom. This has made parking funds in overseas banks a very risky proposition for NRIs/ PIOs. The public sector banks in India are backed by a tacit sovereign state guarantee and subjected to strict oversight by its banking regulator – the Reserve Bank of India.
Over the last decade the Indian foreign exchange situation has improved considerably with the rupee heavily insulated. Our robust banking system has fortunately been able to withstand the crashes that occurred in Mexico, Argentina and Korea, which had economies almost similar to India.
Today, e-banking in India has facilitated operating bank accounts from any remote corner of the world with a click of a mouse without having to physically visit the bank. This has prompted people of Indian origin all over the world to repatriate their funds from their countries to park them back home, into dollar denominated accounts as well, in India.
In the light of the changed conditions here, there is a need to initiate a wider public debate on a rethink on the framework to withdraw the special facilities to NRIs by differentiating between the fake or bogus that exploit and abuse the system while at the same time protecting the genuine.
First of all, the concept of the period of stay either here or there has to be done away with. Anyone born and brought up in India, is purely of Indian origin, with a family in India, residences, villas and farm houses in many cities besides owning substantial business interests, director/chairmanships in India should be expressly denied the special status.
Practically all business tycoons own private Lear jets enabling them to fly in and out of India at will. They bend their stay period to enable them to circumvent the law. This should be prevented by deleting in toto from both the I-T/DTC and FEMA the relevant clauses relating to their stays in and out of the country, mentioned above.
Even when required to include and offer for tax in the US their world income, the PIOs there who had not declared substantial interest tax-free earned on their NRE and FCNR accounts with Indian banks have been nabbed by the US IRS. Possibly this is happening in other countries too. Being NRIs they do not also pay Indian taxes. Getting the best of both worlds should not be permitted. They can pay tax in either country to benefit from the Double Taxation Avoidance Treaties that India has signed with most countries that permit them to set off taxes paid in any one country.
By ushering the end of the special status, the normally resident Indians masquerading as pseudo NRIs should be stopped from holding accounts in tax havens that can any way be made use by genuine NRIs abroad.
With the meltdown in the West and the reverse brain drain arising out of gradual return of our people, the term NRI now assumes a new connotation of Now Returning Indian from the once sarcastic Not Required Indian or Not Reliable Indian!
(Nagesh Kini is a Mumbai-based chartered accountant now turned activist.)