How tax systems penalise even honest taxpayers

Things meant to ease life sometimes cause double the effort.

The digital tax era promised ease –pre-filled returns, realtime data, and seamless reporting. Instead, it has created a illusory mess.

The tax department has created, many such circular traps – flawed reporting formats, penalties for those who point out the flaws, and faceless assessors with no accountability. The result: Millions of taxpayers face needless harassment and procedural dead ends.

Another example pertains to the goods and services Tax (GST). Businesses that cancelled their registrations – due to closure or falling below the threshold – are still receiving notices to file returns. A basic system check could avoid this. Instead, taxpayers must respond, upload proof, wait and pray.

Even if they eventually win, it comes at a steep cost: money, time and enormous stress.

The Central Board of Direct Taxes and the Goods and Services Tax Network have grievance cells, but they function within the same bureaucracy and lack transparency. This gap highlights the need for a statutory Taxpayer Rights Ombudsman with powers to review automated notices and systemic errors.

Truth be told, the tax department’s lack of accountability – combined with pressure to raise revenues – means honest taxpayers must continues enduring these bureaucratic nightmares with serious financial consequences. It is high time India began its journey toward an enforceable taxpayer charter and a statutory grievance authority.

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