The 2017 Budget was finance minister Arun Jaitley’s first to have received fairly positive reviews. Some experts have suggested that the absence of major negatives, or experimentation with taxation, is the biggest positive. However, there is a growing sense of anxiety among taxpayers and business about the unbridled powers granted to tax officials under the guise of going after black money. A sensible government ought to listen to voices of concern; but when its strongest supporters also turn critical, it needs to listen even more carefully. There is still time for corrective action; but, going by the post-Budget statements of the prime minister and senior bureaucrats of the finance ministry, the government is showing no signs of listening.
The worry over amendments to the Income-Tax (I-T) Act unleashing tax terrorism have been repeatedly voiced by chartered accountants after the demonetisation exercise began on 8 November 2016; the Union Budget has only brought the fears out in the open more vociferously. Sushil Chandra, chairman of the central board of direct taxes, attempted to allay fears after the Budget by saying, “There is no need to fear, for any genuine person. We will ensure there is no harassment to genuine persons.” But nobody seems to believe these assurances—not even the government’s strong supporters.
The amendment to sub-sections (1) and (1A) of Section 132 of the I-T Act is one that had caused serious panic; it has a retrospective effect going back to 1962. It says that the tax officers will not have to disclose “to any person, authority or the Appellate Tribunal” why it has “reason to believe” that there has been tax evasion and there is a basis for ordering and conducting a search and seizure operation. Further, sub-section (1) of Section 132A provides that the tax authority, based on suspicion or ‘reason to believe’, can “requisition from some other officer or authority to deliver books of account, documents or assets of the assessee to the income tax authority so authorised.” This change will have retrospective effect going back to 1 October 1975.
It does not require much sagacity to know that tax-dodgers, whose evasion runs into hundreds of crores of rupees, are experts at fixing the system to their advantage. Draconian powers in the hands of tax officials are more likely to harass honest taxpayers by disallowing genuine expenditure. In line with the NDA (national democratic alliance) government’s distrust of NGOs, the Union Budget has also extended the power of the tax officials to conduct search and seizure operations of charitable institutions. This is worrying, because we know that it will quickly turn into a tool of control and harassment by the government.
The amendments regarding search and seizure are specifically aimed at overturning case law where the judiciary had prevented fishing expeditions by tax officials based on mere suspicion, or simply to hound people. The amendments ensure that the judiciary will not be able to question arbitrary actions or raids by tax officials.
Senior advocate and tax expert Soli Dastur, speaking at a post-Budget seminar in Mumbai, said that this amendment, which allows raids and searches without disclosing ‘reason to suspect’, interferes with a person’s privacy and it cannot be allowed to happen in a democratic country like India.
Senior editor Minhaz Merchant, a huge supporter of the Narendra Modi government, calls this a change that is “straight out of Orwellian dystopia” in a fiery article for the website Daily O. He also points to another draconian amendment in the I-T Act that permits the assessing officer to order attachment of the assessee’s property for six months after obtaining sanction from a senior officer. Specifically, the amendment will allow tax authorities to provisionally attach the property of an assessee for six months, either at the time of search and seizure or up to 60 days from that date. At present, property can only be attached after an assessee’s request for stay on attachment is rejected by an I-T commissioner. A person also gets 30 days to apply for a stay. This power was widely misused, even against small companies, even prior to the empowering new amendment.
One can only guess at the enormous blackmail and capricious actions by tax officials that will be unleashed after some crucial checks and balances have been removed, in the name of raising revenues and going after the crooked. It gives assessing officers the power to reduce individuals to penury in one stroke and also shut down businesses by the sheer ferocity of their actions. Most people will not even have the resources to seek judicial redress in our excruciatingly slow and expensive judicial system. Mr Merchant believes that the PM, who is “instinctively against such abuse that amounts to tax terrorism,” should step in and correct the damage; but it is hard to believe that the changes in the Budget have been introduced by the finance minister or bureaucrats without the express consent of the PM.
Mohandas Pai, investor and former CFO of Infosys Ltd, who is a diehard supporter of the Modi government and its policies, has also lashed out at the ‘draconian powers’ being given to I-T authorities after demonetisation and warned that this would only increase corruption. In a recent public speech, he says that people “have voted the NDA to power to prevent tax terrorism, improve tax administration and reduce tax disputes.” He calls the NDA government’s past two-and-half years ‘disappointing’ in this regard because corruption has not decreased much, tax administration has only partially improved, but tax disputes have increased ‘massively’.
Speaking at the Budget session of parliament, PM Modi deflected criticism about the frequent policy changes in the demonetisation period, saying that the government was agile in reacting to the situation, whether it was to alleviate the hardship faced by people or to cut off attempts to convert tax-evaded cash.
In that case, what was the need for even more draconian changes in the Budget? Speaking about such ill-thought out policy changes at a post-Budget discussion, Dr Arvind Virmani, former chief economic advisor at the finance ministry, correctly said, “There don’t seem to be enough tax policy experts in the government” who can think in a comprehensive manner. Dr Virmani says, income-tax is very complicated and you have to think of a multitude of “macro and micro socio-economic relationships” while working on tax reforms. Unleashing tax terrorism in pursuit of a “moralistic obsession with black money”, he believes, will end up with the government “ignoring real economic issues that need to change.”
Actually, I believe that Pratap Bhanu Mehta is on the dot when he says that “the clamour for security, accountability and transparency is leading to unfettered increase in the power of the State,” through laws and technology that will eventually give the government single-point control over every individual. Unfortunately, very few Indians seem to understand the scary significance of these changes and, those who do, can do little about it.
Not to gloss over, in the stride, Minhaz Merchant’ s cryptic critique of such development , of quite a serious nature, as one “straight out of Orwellian dystopiaâ€.
For an intimate appreciation, recommend to look up:
https://genius.com/albums/George-orwell/Nineteen-eighty-four
Clue: “In this Genius edition of Orwell’s 1984 we break down the meaning and the importance of the enduring work, and get down to the root of the question, of whether we have managed to escape the nightmare Orwell so envisioned 66 years ago today.â€
< “Ignorance Is Strength†–
That, at best, as is open to be gathered from wisdom gained in hindsight, is a vile illusion. However, the men in governance / the bureaucracy seem to believe in also have immense faith in that thing called ‘ignorance’; which, of course, is a commodity, forever free, in abundance.
Side Dish: http://www.thehindubusinessline.com/…/sa…/article9535236.ece
No doubt, 'terrorism' /-domestic- or cross border- terrorism, conceptually, is the most dreaded of all ; and has been, not just stray, but the common life- / place- experience for quite long now; and even in those very few once-upon-a-time peace-loving democracies ! Evidencing that , as largely realized, and conceded , 'evolution' of human being, so also of the thing called 'sanity', has not but been an ongoing process as ever !
Turning to specifics: (utterly, butterly) Common Sense Poser > Read through...- 'reason to suspect' ? In comparison, was 'reason to believe' - any better / or any less 'subjective' than... ?? Is Time up to re-frame- " 'discretion' is the better part of ...; or ... last refuge to ....???
Government needs to retrench three quarters of those on Public pay roll and cut down the laws and extortion to a point where a quarter of the staff will suffice. Then they need to abolish reservations and get tough on corruption make corruption an act of treason and a capital offence. Government needs to abolish all subsidies and pay a tax free monthly subsistence stipend to ALL citizens. Enabling people to work for more than just subsistence while maintaining equity and equality under law.
Above all, as I have frequently stated, nothing will change until:
(1) Inequality under law and exceptions to the rule of law (including “reservations†and special privileges for some religions at the expense of others) are expurgated from the Constitution and laws of India.
(2) Bribe Taking is defined as criminal extortion or treason and made a capital offense with special rules of evidence and special courts with summary powers (akin to a Military Court Martial).
(3) All court proceedings are video graphed and archived for public viewing and can be used as evidence to prosecute Judges and Magistrates at all levels under special laws and special courts with summary powers akin to a military Court Martial, for insouciance, negligence, tardiness, dereliction of duty, disregard for law and propriety, behaviour unbecoming of a Judge such as lack of etiquette and manners,
(4) every job on the "Public" i.e. Government Pay Roll has specific and unique Key Responsibility Areas, Key Performance Parameters and Objectives for which they are held accountable on pain of summary dismissal for non-performance or life imprisonment for treason for sabotage under special laws and special courts with summary powers akin to a military Court Martial and
(5) India creates an Ombudsman Service of reemployed and retrained military officers (Colonel and Below, JCOs and NCOs) who retire before 50 to serve as presiding officers, investigating/prosecuting and enforcement officers at the afore mentioned "Special Courts", one for every tehsil with powers to arrest, incarcerate, try and punish any and all from the President of India to a peon in accordance with the Special Laws framed therefor.