The government’s decision to revive the Income Tax Ombudsman scheme that had existed in the 1960s is an excellent move that will give diligent taxpayers the ability to protest against undue harassment. As it is, the UPA government’s frequent threats of increasing tax compliance through increased raids, when known evaders go scot-free is a constant source of annoyance. Honest tax officials are equally frustrated at corrupt colleagues snapping up interesting and ‘lucrative’ postings and deputation assignments; they too are likely o welcome some public appraisal in the form of complaints to the Ombudsman.

An official reacting to criticism against the tax administration says, “One of the lessons that I learnt in my stint in systems is that it requires not only modernisation of equipment /facilities but also of processes and above all of mindsets - both of tax administrators and tax payers. Both will have to drop adversarial mindsets inherited from colonial times. That’s a long drawn behavioural change process. Contrary to stereotypes of tax administrators, there are some of us who are as concerned about public good and public service as any other set of citizens of this country.

Today, the perception gap between administrators and taxpayers seems rather wide; but it is worth presenting both sides of the issue. Let us start with the Income tax department’s claims about increased efficiency. We are told that “Net direct tax collections have increased from Rs 69,200 crore in 2001-02 to Rs 1,67,000 crore in 05-06 and will cross the Rs 2,00,000 crore this year. That is a 20 per cent per annum increase for five years in a row taking revenue collections from 3 per cent of GDP to 4 per cent . The increase outclasses the growth in non-agriculture GDP plus annual inflation in a significant manner. This is not only because of the boom in economy”. Further, we are told that this 5-year period has seen scrutiny assessments increase from 1.89 lakh to 2.36 lakh with additional tax realisation jumping from Rs 4,325 crore to Rs 16,400 crore. At the same time, cost of collection is one of the lowest worldwide at 0.78 per cent.

... contd.