Income tax returns in India - a dystopia for the common tax payer?

An article grabbed my attention during the customary perusal of the daily news on the web. It was talking about "How to get I-T refunds faster" in the Indian context. The scheme described was pretty straight forward - a particular bank is sanctioned to issue refunds on behalf of the income tax department to the tax payers in the form of cheques or drafts. What caught my attention were the comments posted in response to the article. I was appalled to know that it takes "years together" to get the tax returns. I guess I have never filed for taxes back home, since I never earned when I was there. Or maybe, I was just uninformed (since I just know the fact that my dad filed his returns - nothing more), or maybe, I just didn't care. Anyways, things change... hopefully, for the better! :)

I always knew that the bureaucratic processes in India was painfully prolonged and lackadaisical. I had ascribed it to the apathy and corruption of the involved officials, that was in turn caused by poverty and a myriad of other reasons... and finally everything leading to the singular cause to which I attribute most of the woes crippling our country today, the humongous population. I had created a logical sequence of reasoning in my brain with the "gigantic population" as the shield for each and every problem faced by the country, ranging from poverty to illiteracy to terrorism to religious intolerance to corruption - well, my head had this bulwark as the only germane rationale for every possible issue plaguing India.

However, in this particular issue, this blockade started having cracks. According to most sources, only 3% of the Indian population pays taxes. I would say less than 1% is the actual figure (only professionals working in companies and government institutions where it is mandatory to have income tax withheld, actually pay taxes... few others do). So, it should not be that difficult a job to process the tax returns filed and distribute the returns appropriately. It is horrendous to even contemplate that it takes 3 to 4 years to get the returns back. Some might get it back within a year (not sure if anyone has), but even that is a long time. Does the government pay interest for the time period that the tax returns were not paid out?

I could not help, but compare the figures with those from the US. I know that it may not be reasonable to compare a developed country like USA with a developing one like India. However, I believe that instead of trying to find reasons for the unjustifiability of the scrutinisation, we should try do a very careful examination and employ methods that work into our mindset and ultimately, the bureaucracy. According to reliable sources, at least 45% of the US population pays taxes, though a higher percentage pays some sort of tax or the other (property tax et cetera). I myself have been filing taxes for the last 4 years - I get my refund within 10-20 days of filing my taxes. If there are any amendments that need to be made, it might take up to a month. Why this massive disparity... this ginormous chasm? On the one hand, I am not astonished by these numbers... on the other, I am saddened that these numbers fail to either surprise me or beleaguer me. Thankfully, I have not grown totally immune to these issues - they still rattle me more often than not.

The other facet of my consternation is that the major portion of the tax not paid is from the highest earning part of the population. Why should the working class be taxed while the other cadres earning more do not pay any taxes? Consider the controversy brewed around the tax returns filed by the senators here in the US... Tim Geithner, the treasury secretary, refiled amended returns for previous years before being sworn in - this created a huge squabble, but he finally made it in. Though I agree that a huge portion of the politicians and bureaucrats in the US (as well as around the world) evade taxation as much as possible, they are held accountable here in the US, more often than not. Skeletons are drawn out of the closet and careers are ruined. In India, there is no accountability. The corrupt politician who has never paid any taxes what-so-ever could well be the prime minister or the president of our country.

Instead of digressing into a discussion on the corruption in politics and elsewhere, I'll try to come back to the topic under consideration. Is it possible for a change in the scenario? Where does the change start? Would I be paying taxes if I was not held accountable (a salaried employee of a company/government organisation)? Would I be ready to go through the hassle of the long-drawn bureaucratic process, as opposed to a shorter, back-door, easier way of bribing an official? These are the questions we need to ask ourselves, and understand that change cannot be expected from others if we are not ourselves ready for it. Bound by the practicalities of the situation, rather than trying to be idealistic (that I think might be painful to say the least, and hence may not last long), we should try our best to start on the right path in smaller, pragmatic ways.