Fool’s Paradise

Last week or so, in  an article written by a Tax Expert in Dainik Jagran under the caption “Madhya Warg Par Meharbani” [ Gratitude on Middle Class ] one of the Meharbani stated is :

“ The time limit to initiate enquiry has been reduced. Now, the notice can be issued within six months from the end of the financial year in which the return has been filed “

Well that may be one way of looking into the provision which takes effect from April 1, 2008.

But, I thoroughly disagree. On the other hand, it penalises a law abider citizen more than a habitual defaulter.

Let us first understand the provision of law now and sought to be amended with examples.

The present law, requires that a notice of enquiry can be issued within 12 months from the date of filing of the return. It means that if a return is filed on 31^st July 2008, the notice can be issued by 31^st July 2009.

However, under the proposed law, on the same facts, the notice can be issued now by 30^th September 2009.

Take another example, where a defaulter is better placed who files his return habitually on 31^st March. So, he will file his return on 31^st March 2009.

Under the present law, a notice can be issued to him till 31^st March 2010, however, under the proposed law, his notice can be issued till 30^th September 2009 only.

Therefore, the first casualty, the tax abider has an extra risk of two months, and a defaulter is awarded by a reduced period of 6 months.

The second casualty is that, a tax authority can brood over the return of a honest and law abider from August 2008 to September 2009 : 14 months, whereas, in the case of a habitual defaulter he gets just 6 months : April 2009 to September 2009.

The third casualty is that under the present law, all persons are treated equally – 12 months from the date of filing of return, whereas, under the proposed law, it is pick and choose. The earlier you file the return, the more the period. If you file it in April itself, the period is 17 months and in case of defaulter just 6 months.

Think before you ink, this fiscal.