Interview: DS Saksena, principal chief commissioner, income tax, Mumbai
Geetanjali Minhas | September 19, 2016 | Mumbai
How is the response to the IDS?
The response has been good. A number of declarations have come and there have been a large number of inquiries too.
How many declarations have been received so far?
Since the IDS data is classified we cannot reveal details.
How much undisclosed income do you expect to come out from the financial capital of the country?
I feel that a large sum of income would be disclosed and it would be more than the rest of the country.
Read : All you wanted to know about Income Declaration Scheme*
How easy have you made for people to declare income?
We have released five series of FAQs so far. In Mumbai alone we have addressed 2,000 meetings. All officers and finance minister Arun Jaitley too have addressed these meetings. We have tried to find out concerns of taxpayers and address them. Besides, the government has also launched campaigns in the press and electronic media.
The main purpose of this scheme is to clean up balance sheets of businesses so that people have enough white capital to expand their businesses. Because India is now almost a developed country, and at this point we cannot afford to do business with black money. We have to come to a stage where we do a lot of trade abroad. For this, our own part of the trade should be transparent and clear.
What are the measures being planned by the income tax department against those who do not disclose their hidden income in this scheme?
We would like more and more people to disclose their income. So far, the response too has been good. This momentum has to pick up. At present the mentality is to watch others and disclose income only if others have done it. We are expecting disclosures to pick up around the close of the scheme. Even during the 1997 VDIS [Voluntary Disclosure of Income Scheme], we were receiving declarations till midnight on the last date. The same was the case during the black money scheme. Since this is a voluntary scheme people would weigh their alternatives and come forward only after getting convinced.
The finance minister has said that stringent action will be taken against those who do not disclose income under IDS. What type of action is being contemplated?
Under the Income Tax Act the department has powers to unearth undisclosed income. They have powers of search, survey, assessment and scrutiny etc. I think those powers will be used after the IDS window is over.
Similar schemes in the past did not meet with much success, except the 1985 amnesty circular and VDIS 1997, and to an extent the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015. How hopeful are you this time?
This is the right time for this type of scheme because the nation is poised to take off. More and more people want to be transparent and do not want problems with the tax authorities.
Besides the fear of law why will people choose to disclose income?
Because, this is the correct thing to do. If you want people to invest in your business all your assets should be reflected in the balance sheet. If the balance sheet is not clean people will not invest. If you want to grow your business it’s necessary that you have money in balance sheet. That will happen only if you declare your income and make it official.
Why do people generally conceal their incomes, even after knowing that it’s a crime?
It is basic [human] instinct. People don’t want to part with cash and pay the taxes; they opt for shortcuts. If they want to pay less tax they would rather opt for the shortcut and not pay full tax and sleep peacefully.
Despite an online grievance redressal system a large number of complaints are pending before the IT department. Even the PM had to say that senior officers must take personal interest in addressing complaints. Can you throw light on this?
The centralised public grievance redress and monitoring system [CPGRAMS] is an initiative of the PMO where registered grievances are very carefully monitored. In Mumbai, at present, no grievance is pending for more than six months. Our aim is to reduce the backlog of complaints to two months. Today, the number of grievances generated is much less. You have to see it in the perspective of the fact that we have 5.5 crore taxpayers whose assessments are being made every year. Even in the most perfect system there still can be 0.01 percent grievances and people may not be satisfied with the way department has dealt with their case. So, it’s an ongoing process. There are bound to be grievances but our aim would be to dispose them of at the earliest.
Complaints about tax refunds are increasing. How is your department addressing this?
Yes, there is an increasing number of grievances about refunds. However, people who file their tax returns with CPC [centralised processing centre], Bengaluru, would notice that their refunds reach their bank accounts without any delay. This is the type of service we want to give to taxpayers. However, as I said, with 5.5 crore taxpayers there are bound to be a few glitches. But I can assure you that 99 percent of those who file their returns with CPC get refunds within three-four months.
Why is the income tax department not fully electronic?
The department was the first to computerise and now most processes are electronic. Sitting at home you can file your returns online. Previously, we faced long queues on the last date of filing; it would continue till 10 pm. Similarly claims for refunds were a source of constant worry for taxpayers, but, like I said, 99 percent refunds are given within three-four months.
The IT department is not fully computerised because you have a differentiation. The IT department is not fully executive, but has a quasi-judicial function – like the courts in some ways. Because you file your returns of income and we try to determine your income and if you are dissatisfied with your assessment then you file an appeal. So, it is not a fully executive mechanism and cannot be fully computerised.
There are many complaints of assessing officers harassing taxpayers for allegedly underreporting income. How do you address this?
The job of a tax officer is to try and discover your correct income and in the Indian society many people do underreport. So, it’s a tussle between the taxpayer and the tax officer.
Why do people fear harassment from the income tax department?
If you are aware of such examples please bring them to my notice. I will try to address them. If you file correct return of income, I don’t think you should fear the income tax department.
Another common public grouse is that despite paying taxes to the government, the quality of services is very poor.
This is a very subjective question. You cannot make any correlation. Though things are getting better, we are still not a fully developed nation.
Do you suggest any changes in the IT Act?
Due to the large number of taxpayers and diverse businesses no single act can cover all; there may be loopholes. Some people may find it harsh and others may find it otherwise.
Is there a particular type of business that is more prone to hiding income?
It is the real estate business.