Management of Taxes
Chanakya says in the Arthashastra, “The King should collect taxes from his subjects exactly the same way a honeybee collects nectar from the flowers”. This should be the objective of any State Government or Central Government when it comes to the collection of taxes from its people. The art of Better Tax Collection and Better Tax Management is an indication of better governance of any country. The common wish of every taxpayer is that such taxing times should never come again. And the fact of the matter is that we are in a worst taxing times of our lives. Everybody’s time is taxed and nobody’s time is relaxed. When it comes to our taxes there are only two choices: either we save our taxes or pay our taxes. Everything on the earth is taxed today except the tax itself. I think the taxing times are here to stay forever.
It was none other than Albert Einstein himself, a greatest genius on earth, who used to say that he can understand everything but he can’t understand the taxes. He said, “The hardest thing in the world to understand is the Income Tax”. This is really a fact of life today. Efforts are being made by the Governments for years now to make the taxes simpler. I think the Governments and the tax experts must be following the insight given by Albert Einstein on the laws of nature. He says, “Everything should be made as simple as possible, but not simpler”. His protest must be more with the system of taxes than the fact of taxes. And what’s the result? The more they try to make it simpler, the more it becomes complex and complicated. Let us hope that the new Direct Taxes Code (DTC) does not become a Da Vinci Code. The Direct Taxes Code (DTC) was likely to be implemented from 1st of April, 2011. All the deadlines have been postponed. Let us hope that it will bring better changes to taxes and our taxing lives. The most taxing activity in the world today is planning our taxes and paying our taxes. Can we all attempt to solve a simple quiz? The quiz is: What percentage of tax revenue is needed just to fund the Act of Taxation? This puzzle does not seem to be that simple. And I somehow feel the answer to this puzzle lies in one of the insights of Albert Einstein. He says, “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former”. And the answer to the above puzzle must be, “infinity”. It would have been really very easy to the tax and revenue authorities to make tax assessment of Albert Einstein. In all cases it would have been a best judgement assessment, because the guy says, “I don’t keep books, records, recordings of anything. That’s too complicated”. Oh my God!! Just see his honesty !! I have no doubt that the statutory authorities would have grilled him for this for hours and hours. In any case, the best judgment assessment would have been the only solution to his case. I know he was a great genius. What I am saying is just on a lighter side.
And before we move on any further, let us try to understand the Indian Tax Structure. I think by answering just a few simple questions we will be in a position to understand to some extent the most complicated tax structure of India.