Mr Jaitley, why is the income tax department hiding data?

19112014

Rediff.com                                                                      November 18, 2014                                                                       Prof Vaidyanathan

Our income tax department should bring out monthly bulletins as well as annual reports providing insights into the nature of our direct tax segments

Palaniappan Chidambaram, finance minister in the United Progressive Alliance government, in his Budget speech in 2013 mentioned that 42,800 people are assessed to tax for income of more than Rs 1 crore (Rs 10 million). This is out of 3.10 crore assesses. Understandably, there was a hue and cry since the numbers were perceived to be very small. But the story is more interesting since the ministry has decided to hide data from the public.

India’s income tax department does not provide any statistics about the number of tax assesses, amount of tax paid, income ranges for different categories like individuals/Hindu Undivided Family/corporates etc.

The tax department is extremely economical in giving any data pertaining to domestic tax payers not just in terms of names but even aggregates.

For instance, an important aspect is about exemption given to tax for dividend income in the hands of shareholders. There are owner shareholders who may be getting more than Rs 100 cr (Rs 1 billion) as dividend by virtue of their shareholding. We do not know how much dividend was distributed and how much individuals benefited.

According to Reserve Bank of India data, Rs 50,145 crore (Rs 501.45 billion) dividend was paid in 3,041 public limited companies (as of 2011-12). The bank further says that in 1,741 private limited companies, Rs 1,423 crore (Rs 14.23 billion) was paid as dividend. This implies that at least Rs 51,500 crore (Rs 515 billion) was not taxed by the government and at the rate of 30 per cent it amounts to Rs 17,000 crore (Rs 170 billion). [Source: RBI- Finances of select Public Limited Companies and 1741 Private Limited Cos 2013]. Of course, financial wizards and accountant will argue that companies are paying dividend distribution tax, but that does not come anywhere near 30 per cent.

Details of different ranges of dividend income and number of beneficiaries will be very useful to understand who benefits most in the system — shareholders or salary-earners

Table 1, below, has the information available from I-T department about tax assesses in India for different categories. It reveals that there were 3.1 crore assesses in 2010-11 but it does not tell us about the amount of taxes from different categories. Instead of such detailed information, what is provided now is the aggregated numbers — that also if some member of Parliament decides to ask.

Table 1. Category-wise Number of Income Tax Assessees in India

(2008-09 to 2010-11)

Year	Company	Individual	HUF	Firms	Trusts	Others	Total
2008-09	327674	30101260	768845	1310849	71145	70854	32650627
2009-10	367884	31384084	806236	1354330	76898	95994	34085426
2010-11	496872	31035394	761911	1229722	119378	95487	33739124

Source: Indiastat.com, Lok Sabha Unstarred Question no. 2062, dated on 02.12.2011

Till year 2000 the All India Income Tax Statistics used to provide detailed category-wise statistics. This publication has been discontinued. In other words, the finance ministry has become shy of providing details of the tax assessed. Anyhow, we will look at the year 2000 numbers. (See table 2 below).

It says that there were no salaried persons in the country with an income of more than Rs 1 crore, and, in all, there were around 250 people above the Rs 25-lakh annual income level. In the case of self-employed, the number is around 900, with none in the Rs 50 to 100-lakh category!

Table 2. Number of Returns, Individuals (Salaried & Non-Salaried Persons)

Range of IncomeRs Lakh	SalariedNumber of Returns	Non-SalariedNumber of Returns
25-50	103	672
50-100	155	NIL
100+	NIL	258

Source: All India Income Tax Statistics [AIITS]—Directorate of Income Tax—New Delhi—2001.

Looking at table 2, we feel that a relief fund should be created for all our top film stars, cricket players, surgeons, lawyers, chartered accountants, architects, tax consultants and other self-employed persons. They all seem to be in distress.

The I-T department used to publish data on the number of returns from several categories of services till the year 2000. The numbers used to speak volumes about the coverage and also about the nature of underlying collections. Such details are not published by the I-T department anymore.

Of course, we get a news item like, ‘The recovery of tax arrears of about Rs 91,000 crore from stud farm owner Hassan Ali Khan is not possible, the finance ministry has informed a parliamentary panel — even after all immovable and moveable assets belonging to the group have been attached.’ This is not the way a sum of nearly one per cent of our GDP is written off without adequate disclosure to the public at large.

It may be worthwhile for our finance ministry to check the web site of income tax Authorities of some of the G7 countries. They provide copious details and significant amount of insights.

Similar to RBI, India’s I-T department too should bring out monthly bulletin as well as annual reports providing insights into the nature of our direct tax segments. Otherwise it will only be perceived as a corrupt and non-transparent government department.

In the context of computerisation of the I-T department, there is all the more reason they should revive the All India Income Tax Statistics and make it bigger and larger in terms of information dissemination. Ostrich-like attitude is not of much use in sharing of financial data since it will only increase distrust.

  ____________________________________________

  R.VAIDYANATHAN

  PROFESSOR OF FINANCE                         

  INDIAN INSTITUTE OF MANAGEMENT

  BANNERGHATTA ROAD              

  BANGALORE

  INDIA –560076

  TEL: 91-80-2699-3086

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