Plea of individual taxpayers: Making tax collection hassle-free

Series of discussions, roundtable meetings and seminars are being arranged by different chambers/ research institutions, and a lot of articles are also published in newspapers to share/disseminate ideas and thoughts on income tax/VAT/Customs Duty rates towards creating a congenial business atmosphere in the country. However, there is hardly any discussion on the well-being of individual taxpayers, whose spending has increased manifold due to increasing food and non-food inflation having direct impact on consumer price index.
Approximately, only three/four hundred thousand people in the country pay taxes regularly (out of 2.5 million TIN holders as reported, of which cent-percent serve in the country's banking sector (including NBFIs). It is hard to believe that in a country inhabited by a population of approximately 160 million, the ratio of taxpayers is only 1.625 per cent, reflecting one of the lowest tax-GDP ratios among countries of the world.
Besides, it is unfortunate that persons who are paying good amounts of taxes on regular basis without any concealment or deliberately committed mistakes are suffering due to the harassment of a few unscrupulous taxmen round the years who send notices, call over phones for physical presence demanding 'sweetener' to settle the inadvertent mistakes taking the advantage of the taxpayers' ignorance or limited knowledge regarding tax regulations. To avoid hassle, they are compelled to involve themselves in unauthorised monetary transactions from their hard-earned income, instead of lodging complaint. Millions of people who are not paying taxes or paying less than what actually they should are living without such hassle or harassment.
In this context, it is worth mentioning that a significant number of people in the country are willing to pay taxes, provided they are spared of harassment. In order to curb the existing malpractices and to render collection of taxes less cumbersome, proactive steps should be initiated. Some of the following steps may be considered:
* Online return submission for individual taxpayers may start from the upcoming assessment year,
* Option of manual return submission may be reserved for taxpayers, if so desired,
* Initiative to be taken to introduce auto generated online TIN Certificates for taxpayers with minimum fee,
* Tax calculation should be simplified so that the scope of mistakes are minimal,
* Queries or clarifications to be notified vide online communication to the concerned taxpayers and submission of online clarification with supporting documents to be acceptable if deemed fit/authentic,
* Privilege cards to be issued for all taxpayers and such cards should be designed in such a way so that the rank of taxpayers along with number of privileges are provided,
* Bank loan, endorsement of foreign currencies for travel abroad, credit card limit should be extended by the bank depending on taxable income and expenses,
* VAT rebate and/or award also should be introduced for aforesaid taxpayers to enhance the area of VAT net,
* Tax/VAT on children's education/necessary goods/foods to be completely withdrawn for building a healthy nation. Instead, extra emphasis should be provided to collect good amount of tax/VAT from educational institutions specially English medium schools/private universities/colleges/medical and other colleges/universities,
* More effort to be given to earn tax/Vat from untapped area,
* Effective and independent Complaint Cell to be established, which should be monitored by an authority other than NBR.
* To curb corruption, whistle blowing act/law should be enacted immediately,
* Investment Allowance, Capital Gain, Transfer Pricing rebate/tax calculation to be simplified,
* Income from recognised Provident Fund to be made tax free irrespective of duration,
* Minimum tax threshold to be not less taka four hundred thousand, which should be increased each year considering inflation,
* Return of employees (only income from salary) of all companies/partnership firms/proprietary or sole trader business to be submitted by such companies/firms etc., and which should be cross examined. However, income from other Heads/Sources to be filed in by the taxpayers separately through online submission (if any),
* Punitive actions (including provisions of imprisonment with monetary punishment, cancellation of practising certification) to be taken against firms who certify reports of companies/ firms for tax dodging,
* Majority of country's people are trading/transacting outside the banking channel, which should be reduced by way of expanding banking operations to the unbanked areas,
* Mobile banking may be a major tools of tracking income on which tax may be imposed at a lower rate(s),
* All expenses of individual tax payers/ company taxpayers to be disallowed, if not reflected in their bank A/c(s), which has already been introduced in Tax law, but not practised due to lack of monitoring.
* Usage of plastic money/POS to be popularised for increasing payment/receipt through banking channel which would prevent evasion of tax and reduce the scope of illicit transactions/bribery/money laundering,
* Sophisticated and integrated software to be procured to identify mismatch of income/expenses of individuals/companies/other concerns/taxpayers,
* Tax paying by different individuals/companies/firms/sole traders to be compared with each other (for peer group comparison) by introducing spy software so that concealment of income can be easily identified and penalty imposed,
* Tax payment/refund process to be simplified,
* Electronic and online payment through banks/FIs to be introduced for quicker collection by exchequer.
The writer is Executive
Vice President, Mutual
Trust Bank Limited