One of the most frequently used words in India, corruption signifies a range of things. In 2005, Transparency International and Delhi based Centre for Media Studies, a research firm, undertook the India Corruption Study. The survey covered 14,405 respondents over 20 states and included interviews with service providers and users (of these services). The results, published the same year said Indians pay out around Rs 21,068 crore as bribes while availing one of 11 public services. While some of the results of the survey were published, many of the details were not. The study, however, remains the most recent and the most comprehensive report on corruption in India. Apart from calculating the extent of corruption, in Rs crore, it explains the mechanics of it.
Here, we look at the income-tax department.
The Trouble with taxes
People who pay taxes in India don’t have it easy. The difficulties they encounter while dealing with the department makes them easy targets for middlemen.
1. Absence of Officers
The IT department is seriously short-staffed and tax-payers often find themselves having to come back again because the concerned officer is absent, not at his or desk, or busy
2. “Come back with clarification”
Because taxpayers aren’t aware of and have not been educated about tax laws, they are easily deterred by officials who ask them to come back with clarifications, some of which may not actually be needed
3. Complete more formalities
Again, lack of awareness is the cause for this. Officials can ask taxpayers to get more certificates or documentation which may or may not be needed to complete the task. Taxpayers have no option but to comply with this.
4. Incomplete Applications
Although newer IT forms are simpler, there is still a lot of confusion regarding them in the minds of taxpayers. These taxpayers are easy prey for middlemen and touts who offer to fill up their forms and have their work done, for a consideration
5. Non-cooperative officers
Some IT officers do not believe in customer service; their whole attitude is one of indifference towards taxpayers.
Why People Pay Bribes
1. Filing Returns
All salaried people and businessmen have to file returns. The process is becoming increasingly simpler but still takes time and effort. Sometimes, taxpayers resort to bribes to reduce the time and effort involved.
2. Ensuring IT refunds
Some times, people end up paying more tax than they need to; they need to recover this amount through refunds. Although this process too has become increasingly simpler over time, there is still a bit of discretion involved in it. Tax-payers pay a small portion of the amount to be refunded to ensure a speedy refund.
3. To reduce the penalty
Although the scope for this is limited, it is possible for people who have avoided taxes and been caught out to avoid paying the penalty. They can simply do this by bribing the concerned official in the IT department.
4. Under assessment
All tax payers want to minimize their tax liability and pay out less as tax. One way to do this is through under assessment or being assessed as having earned lower income.
5. Issuing PAN cards
The permanent account number (PAN) card, proof that an individual is an income tax assessee has become an important document and is required for several high-value transactions. Although applying and getting a PAN card has become easier, tax payers still resort to paying bribes to get theirs faster.
1. Reduce the need to visit IT departments
· Enable banks and post offices to collect returns
· Create a call center that can provide information on payments, refunds etc
· Create a website that provides information on tax policies as well as on things such as payments and refunds
2. Focus on customer service
· Create a citizen’s charter in association with tax payers and consumer organizations
· The charter should have penal provisions for failure to meet with basic time-frames for responding to customers
· Every tax office should have a government-appointed advocate to help citizens
· Staff at IT offices should be trained to make them focus on customer service
3. Improve the state of IT offices
· Train staff in customer service
· Salaries for staff at IT offices should be performance-based with a high variable component
· Staff should be rotated across functions and offices
· Promotions should be based on merit
Action should be taken against errant, unresponsive officials