Tax filing processes, forms need modifications

In the past few years, Budgets contained many technology-related initiatives. As a result, we now see a fair amount of computerisation of processes, e filing of returns, viewing of one's taxes withheld on websites, etc.

But, there are also practical glitches that require attention in order to make these initiatives really work well. Sahaj and Sugam, introduced last year, did not help much due to the stringent specifications for printing these forms.

Under the current provisions, an employee can declare to his employer details of other incomes and taxes withheld, viz interest on fixed deposits, salary from the previous employer (where the employee has changed employment during the year), etc.

Upon such declaration, the employer is required to consider those details. Form 16 does have columns to incorporate the other income declared by an employee, but there is no column to include details of tax already deducted by the previous employer or payer of other income.

Assuming that the previous employer has deducted the taxes in excess and the current employer has considered that while deducting tax on salary paid, Form 16 issued by the employer would show as tax short-deducted in the absence of mechanism of including the taxes deducted by the previous employer. This lead to the issue of demand notices by the tax authorities

Form 26AS on the website shows the detail of the income and taxes deposited thereon in relation with taxpayers. Where there are posting errors, an individual taxpayer is not granted credit of taxes withheld. Those tax payers who have worked outside India and are claiming credit of taxes paid overseas, 26AS does not capture details of such foreign tax credit.

The result is that taxpayers get demand notices and are left to struggle to submit the proof of taxes withheld, viz Form 16/16A or submission of proof of taxes paid overseas, etc, in order to get rid of these notices.

The government should consider changes in the processes or forms to make things convenient for taxpayers.

Kuldip Kumar is the Executive Director (Tax & Regulatory Services), PwC India

With Inputs from Chander Talerja, Senior Manager (Tax & Regulatory Services), PwC India