The scheme involving 'Tax Return Preparers' will be operationalised from July 1 this year (it was announced in the Budget) and will cover most categories of taxpayers barring corporate houses and cases under litigation.
The return preparers will initially be law and commerce graduates who have been certified to provide the service.
Self-employed, small businessmen with a total income of less than Rs 300,000 per annum, women, senior citizens and salaried employees will benefit by availing of the services of a tax preparer.
Eligibility for becoming a tax preparer, expected to be initially restricted to only law and commerce graduates, may be extended at a later stage. This proposal will keep the preparers within a manageable limit of 1,500 to 2,500 at a time.
An internal committee report of the Central Board of Direct Taxes is now being examined by the finance ministry in order to formulate the rules and identify a partner organisation to operationalise the scheme.
The committee was headed by B P Sah, chief commissioner, income tax. The report stated that since the scheme is intended to target small and marginal tax-payers who need to file straight returns, it would not cover companies, association of persons or a body of individuals and local authorities where audit is mandatory.
Similarly, it said returns which require compulsory audit as per the Income Tax Act should be kept outside the purview of the scheme.
It recommended that tax preparers could charge a fixed fee of Rs 250 from tax-payers for each return filed by them. In the first three years, the tax preparers could be reimbursed a percentage of the tax collected.
The percentage of the tax collected was pegged at 5 per cent for the first year, 2.5 per cent for the second year and 1.5 per cent for the third year. The report observed that funds for the scheme could also be earmarked under the National Employment Guarantee Programme.
It further mooted setting up of a 'Resource Centre' in Delhi as a separate directorate, headed by a director of income tax, which could act as a nodal agency for the scheme.
The committee said the scheme should initially be pilot-tested in four towns of different sizes representing four zones --Delhi, Asansol, Coimbatore and Pune. Around 25 candidates could be randomly selected from law and commerce colleges in these cities for training under the pilot project.
It also recommended amendments in the 'Saral' form used to file returns of income, to include details such as name and signature of the tax return preparer, his identification number as allotted by the department, the amount of tax paid, the year and age of the tax return (i.e whether it is the first year, second year or third year).
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