Simplify income tax so that what’s due is clear

livemint.com:

As the last date for filing income tax returns arrives, the scramble to get documents in order and meet the 31 July deadline reminds us of how little has changed over the years. With the authorities cracking down on non-filers and false-claim makers, taxpayer anxiety over potential errors that may invite penal action has gone up. Of course, it is the government’s responsibility to ensure truthful reporting and catch tax evaders.

But if efforts to achieve this make individual tax liability too complex for people to understand, it exposes taxpayers to the unfair hazard of violating rules they are not fully aware of. Unfortunately, the task of complying remains so taxing that tax consultants are often needed. The Centre did promise to ease the process, but so far this has mostly meant the use of software to collate relevant data and present us with what tax scanners have on record.

While digital technology can crunch our numbers to give us final tax bills, offering us pre-filled forms does not aid clarity. Instead, it could end up turning taxation into a black box for those puzzled by the details. Last week, finance minister Nirmala Sitharaman said that India’s tax department is transparent, objective and friendly.

This is unlikely to reassure citizens daunted by the annual exercise of tax compliance. For a start, what all counts as income has been shifting too often. Some years ago, for instance, dividends earned by individuals were placed back under liability coverage, so now even small sums received on a handful of equity shares need to be tracked.