The Taxman Cometh - II

Clause (ii) of sub-section (2) of section 2007

And whether you're an honest man, or whether you're a thief, depends on whose solicitor has given me my brief. - Benjamin Franklin.

NEWS YOU CAN USE : The income tax department has gone “e”.

Now one can file tax returns sooooo conveniently just by downloading the appropriate form ( if you can figure out which ones pertain to you) and use the return preparation software.

Then when you are all confused about how to use the software, or if you have any questions about a particular tax loophole, you may call the toll-free tax helpline number closest to you and listen to the engaged tone until you feel you have a clearer understanding of how helpless you really are and need to now contact a chartered accountant.

There are not many changes in the new tax form, only about 957 significant disallowed expenses. But the good news is :

1. Santa Singh is still the commissioner of income tax.

2. The P.A. to the Assistant Undersecretary of Poverty relief is changing the upholstery in his new office, which costs more than your annual salary, and the government now finding itself in serious debt, also exhorts you to send in “voluntary contributions”.

You are not required to send in more money than what you actually owe.

You can also send in gold, jewellery, clothing or accessories. Santa Singhs’ shoe size is an 8.

When filling in your tax return form this year please remember to avoid the following errors:

When writing up fictitious numbers please use figures that sound plausible such as Rs. 9847.45 instead of the more obviously telltale amount of Rs.10000.00.

Remember that tax officials scrutinise returns even more closely when taxpayers names sound like Dawood Abraham, Harshad Mehta or Rakhee Sawant.

Now for some tax case studies and how they should be handled under the latest tax laws, regardless that it states that this is referred to as the INCOME TAX ACT 1961*.

CASE NUMBER 1 : MLA Shri Sachananda Bihari Jha established a trust for his 9 children where each of them when they turn 18 will receive a Mercedes Benz and 5 villages.

When beating up his bonded labourers 12 year old son one day he vaguely recollects having bought some contraband cattle fodder.

QUESTION: What should Shri Jha do?

ANSWER: He should immediately summon his party workers and his press secretary to place ice-packs on his forehead and soothe him until he can be named to replace Ronen Sen as ambassador to the US.

CASE NUMBER 2 : Shri and Shrimati Bholaram are a working couple with 2 dependant school going children and a gross total annual income of Rs.2,30,000.00.

During the first financial quarter they received a tax notification that according to the e-governance income tax computer they owed Rs. 10 Crores as taxes.

Laughing at the huge blunder the income tax Department had obviously made and how they would be interviewed by NDTV as victims of typical government lassitude they show this to their friends and neighbors.

QUESTION: Can the Bholarams deduct the cost of the orphanage where they admitted their children while they were interred in debtors prison for four years?
ANSWER: They may deduct 33 percent of the amount spent on food for the period after adjustment to allow for the inflatable index, up to but not greater than Rs.2580.00, provided they maintained accurate records.

CASE NUMBER 3 : Shrimati Ulaganathan, 71 years old, living on her railway pension with no other income, receives a phone call while asleep one night where she discovers she might have an illegitimate son. Shocked, she dies of a heart attack.

QUESTION: Does Shrimati Ulaganathan still have to file a tax return?
ANSWER: Yes. Don’t be stupid. She should use Form ITR-12 Individual and Deceased Person, which can be obtained from the Income Tax Customer Relations Centre on any working day between 9am and 12 noon.

Finally and sadly, I have received word of the deaths of my chartered accountant at the tender age of 46, and 48 hours later my foster dad who was ailing also passed away.

It is hard, at such a time of tragedy to find words to express my feelings, but I speak for all of us when I quote Benjamin Franklin once again who said “In this world nothing is certain but death and taxes.”

On a more upbeat note he also said, “I look upon death to be as necessary to our constitution as sleep. We shall rise refreshed in the morning.” We can't say the same for taxes, that's for sure!

The Taxman Cometh - I

Clause (i) of sub-section (1) of section 2007

It’s past that time of year, time for all you procrastinators to get sent notices for failing to file your tax returns.

Which prompts me to ask when are we going to get some tax reform ?

We’ve been trying to get tax reform for over a hundred years when someone named Aamir Khan of “Lagaan” fame tried to figure out why they called cricket a “Gentleman’s Game” and discovered that the taxman, British or otherwise, was born without a soul.

And so today my tax return has not been filed and I am being notified, which means one of two things :

1) I’ve hit the big time.YEAAAAA ! Or …..

2) They’ve found out where I hide my booze for those dry days come election time. Bummer!

The problems methinx with the taxation system today is this:

@ The poor pay nothing.

@ The rich pay even less.

@ The large corporations get tax holidays.

@ The Government spends whatever little there is on hare-brained nuclear schemes.

@ No one else pays anything except you, me and ten people where you work.

@ The Commissioner of Income Tax is a guy named Santa Singh.

I propose therefore a tax reform in three phases which would be as follows:

1) We pay only One Hundred Rupees as tax.

2) Falsification of your tax return would be allowed.

3) Anyone who cuts you off in traffic would be thrown in jail (this is not really related, but folks, I've touted this idea to a number of persons and they tend to agree that it should be included.)

Manmohanji made tax reform the platform of his election speeches, just like he made tax reduction the platform of his budget presentations when he was Finance Minister.

He then went on to draw up a mysterious graph on Soniajis’sari pallu to show how the economics of supply and demand would be implemented by a three-pronged strategy of :

1) Importing wheat at exhorbitant prices.

2) Striking an Indo-US nuclear deal and….

3) Holding joint war games with them in the Bay of Bengal.

This is known as the Bakwaas Graph which allegedly shows that when you hold said sari in a certain light the government would make more money and the budget deficit would be reduced.

It wasn’t until recently that economists realized Soniaji had been holding her sari pallu sideways and then a wonderful thing happened. The opposition and the left front, a group of persons who have large pockets for the convenience of MNC’s wishing to make large contributions at midnight, developed a rare courage.

They look a hard look at facts and said: “Are we a bunch of pimps selling out the nation by taking large sums of foreign aid and giving them what they want? No! Let’s take large sums of foreign aid and NOT give them what they want!”

It is a brave step by these courageous men and women, a step that will take them beyond brokering into the realm of international faud.

It is to be hailed as a positive step in the annals of Indian fiscal jurisprudence.

And this is how we will achieve tax reform.

You ask how tax reform will affect you, the common man. The answer is that it will change your lives exponentially.

Let’s assume you are a middle-class family with two children and both parents are working. You also have occasional electrical problems where voltage fluctuations short-circuit your appliances two days after the warranty expires.

With the new system, you will get about a dozen unintelligible forms from the government to fill up, and with your electrical problems taking priority you will put off doing anything about these forms till the very last day, then you will be confused by the directions and will realise that you have spent your tax money on bribing the electricity department and have not kept receipts for the generator and the petrol.

Then you will worry about being notified.

Other than that things will not change and Santa Singh will still be the Commissioner.