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Income Tax Department: Refunding Corruption
Welcome to the silly season! It’s springtime, love is in the air and yes, corruption too, because it’s Income Tax time. It’s bad enough paying tax, but when you have to pay a bribe for getting your tax refund, that really makes you feel lousy.
First, the good news. Most of you won’t have to pay bribes, because the IT department has taken whole heartedly to information technology. Earlier, income tax babus were notorious for extracting bribes for releasing refund cheques. If you didn’t pay up, they would send it out very late, so that by the time you got it, the cheque would have already expired! In other words, they made asses of assesses.
The government changed the system, from January 2007 onwards. First, they introduced the Refund Banker Scheme, under which refunds were directly sent to assesses’ bank accounts. Starting 2008, the IT department set up a Central Processing Centre (CPC) in Bangalore, where all returns are sent for automatic processing. Then the system of e-returns was introduced. Since 2010, all corporates, firms and other assesses who have to get accounts audited shall have to compulsorily file e-returns. Individuals can also file e-returns, though it’s not compulsory. Anyway, whether you file returns on the net or on paper, all of them are sent to the CPC which automatically processes them. These chaps are good – they process something like 1 ½ lakh returns every day!
Once the return is processed and a refund is due to you, currently the CPC sends the money directly to your bank account, if you have provided details earlier. You can view the status of your refund 10 days after it has been sent to the Refund Banker by the Assessing Officer; by entering your PAN and Assessment Year details in the following website: https://tin.tin.nsdl.com/oltas/refundstatuslogin.html
Now that’s wonderful; this is indeed something that must be celebrated! Corruption has been dramatically brought down, through the intervention of Information Technology.
But is everything squeaky clean? Ipaidabribe.com did a quick check to find out whether corruption still lurks in the IT department, and discovered that behind all the good reforms they have carried out, there is bad news.
What is the catch, you ask? At present, the CPC directly and automatically processes all refunds below Rs. 1 lakh. No human interface is involved. But all returns where refunds are more than Rs. 1 lakh are sent back to the assessing officers concerned, who then manually issue the refunds. No prizes for guessing what happens next, these officials take bribes! I am told the bribe is between Rs. 2000 to Rs. 4000 normally, but it could be much higher, depending upon how greedy the officer is.
Here are some recent instances of corruption reported on IPAB. It seems that corruption continues even for getting refunds less than Rs. 1,00,000!
Mar 4, Agra
I paid 1000Rs to get my 25,000Rs income tax refund. Actually the organised rate was 10% of the refund value, which comes to 2500Rs in my case, but considering my situation and my behaviour, towards him, he settled the amount to 1000Rs. The person who took the bribe in here was a really nice man as he did his work very efficiently, after taking the bribe. This is the particular trait in these kind of people, who take their work so seriously if there bribe amount is given, which they always neglected it, otherwise.
Mar 4, Indore
I had my refund for Assessment Yr 2009-10 of the tune of around 1.57L. 3 months back, the IT officer called up my office concierge person about the availability of check. The tax refund check has arrived and he is demanding 10% of the refund for approving the check. His point is: I am not loosing from the refund amount, but only from the interest that Govt is paying me on my refund. At last we agreed on 10000Rs. this last week and the check is getting processed now.
Jan 28 Bangalore
I found that my wife's excess tax for financial year 2007-2008 of Rs. 16000+ is not yet refunded, when I approached the office, the clerk there checked the details in the system and confirmed that the amount has to be refunded, and he demanded Rs.3000/- for making the refund, finally he taken Rs.1500/- as a bribe processsed the refund.
Jan 21 Noida
IT Dept had thankfully sent me a cheque for approx Rs10000/- as I had paid excess tax (TDS). Unfortunately, cheque was issued long back, but when it came by registered post, there was hardly a week time for cheque expiry. I was unwell and on bed-rest and supposed to vacate the rented flat by end of June08.
So, I thought I lost my money but my Bank advised its a common thing and asked me visit Noida IT department for renewing the cheque or re-issue of cheque. When I visited IT department they simply informed that process would take more than a month and I need to submit and application for that. When I requested them to allow me to speak with seniors, they allowed me (this was also a surprise), it seemed they understood my requirement, senior official in their department advised me that he will get the job done by authorised signatory and I can collect the renewed cheque subsequently during second half of the day. Later after about two hours, they asked me to submit 1000 Rupees in drawer for cheque renewal charges. I agreed but asked them if they can provide an invoice/receipt for which they denied. My cheque was renewed but they were simply not ready to handover, office closure time was approaching. I had to vacate the house next day, I didn't had any cash in my hand, I requested them I badly needed money and paying 10% of total amount is too much.. they said make it 5% and settle it asap. I had to contact my home, arranged Rs 500/- which they asked me to drop in drawer and they issued me cheque, which was same cheque with a stamp for renewal and authorised by IT department head. It was really painful for me to succumb to bribe pressure at the same time, my tight financial situation was also bad, so I agreed to opinion of paying Rs 500/- for getting my Rs 10000/- cheque back.
Jan 20 Chennai
I did not receive the tax refund which was due for FY2005. In spite of regular follow-up and also showing resistance to paying bribe, the amount was not refunded. At the end, in Jan. 2011, I had to pay bribe of 3000 to get 37000 Rs refund.. Very painful that money goes to such people.. I would love to help the poor and needy with the amount.
And yet, there are good stories! Here’s one from I didn’t have to pay a bribe.
Dec 30, 2010, Hyderabad
I didn’t have to pay a bribe for getting the income tax refund cheque and it arrived exactly in 7 days as promised. Long Live the officer !!!
Now why does the IT department send high value returns back to the assessing officers, when the CPC can easily process them too?
Ipaidabribe.com spoke to a senior officer in the government to find out why. He says that the IT department needs to check whether the assesse concerned has any previous dues pending, before they can release the refund. That sounds justified, but most businessmen say that this is only a ploy to delay sending the refund and to collect bribes.
How can the system be improved? In the long term, all returns should be automatically processed. But in the short term, the manual system has to disclose publicly where the return is lying. If you can track your return in the CPC office, then why should you not be able to track it in the office of the assessing officer?
So we recommend the following steps to the IT department
• The details of the returns sent back to the assessing officers, including the date on which these have been sent back, should be made public by the CPC.
• Following this, the assessing officers should also have a net-based tracking system that shows when they received the return and what its current status is.
• The IT department should also give details of all pending arrears or demands of tax to the CPC with periodic updates, so that these can be verified by the CPC itself and refunds are issued by them only after verification.
• Citizens should also be able to view their tax arrears online, just as they are able to follow their refund status online. That way, there will be full transparency and citizens can themselves take action to pay the arrears. It will be a win-win situation for the IT department and citizens too!
Now, to all of you out there, till then, please try to trap some of these corrupt IT officials and clerks. You can record their corrupt acts using a mobile phone. If somebody demands a bribe for you to get your return, get the details and report the case to the Central Vigilance Commission, at http://www.vigeye.com/. They promise to investigate into the matter.
Complain to higher level officials. Improve your body language. Don’t be submissive, get angry and say enough is enough.
Till technology catches up, the answer lies with you. If you complain and dig in your heels, they cannot delay your refunds. So, please go ahead and ensure you don’t pay a bribe.
Don’t forget to post your success story in our ‘I didn’t pay a bribe’ section!