Written in : August 1998

Last week I wrote about the changing priorities and outlook of the tax department. After I wrote that, I had occasion to address a group of businessmen. The discussion came around to the same matter. A very interesting issue came up for discussion in the course of the meeting which deserves wider discussion.

I wrote last week that the role of the tax department role is changing. The department has changed its role from being an enforcing authority and it has took it to a much wider canvas. The department had, all these years, considered its main function to be enforcement of income tax law - of collecting returns of income and making assessments by calling for and examining books of accounts. Virtually every person who filed a return was subjected to a scrutiny assessment. His books of accounts would be called for examination and a detailed assessment of his income would be made. This was the main function of the tax officers and profiled the entire character of the department.

At that time, we heard of the manner in which returns got accepted in the more developed countries and how very few of the taxpayers were subjected to audits, ie, scrutinised assessments. It became a matter of envy for us.

However, things changed fast in India. The government realised the total futility of its traditional approach. The whole exercise of scrutinised assessments of all returns did not offer any 'return on investment' - it simply was not worth its while doing it. The additional revenue generated in the process of assessments was insignificant. This was inherent in the nature of assessments - essentially a post mortem exercise. Besides, factors like corruption, smarter taxpayers etc added their own worth.

Having realised this, over the past few years the government changed tack. It introduced the File, Smile, Go scheme where you file a return and forget the tax department - for the most part. This scheme was the beginning of the big change. In this scheme, once you file returns the acknowledgments would be all you get and only a small minority of cases would get selected for a detailed assessment. For almost a decade now (yes!), only a small percentage (as low as 3%) of cases are selected for scrutiny and the balance are subjected only to a summary assessment which, in reality, is no assessment but mere scanning of returns for obvious errors and patently false claims.

Today, as we saw last week, we have a situation where the tax department has suspended all scrutiny assessment work for an entire fiscal year to concentrate on better things. That is some distance that the department has travelled.

All this releases the energy of the tax officers to do better things on which returns are higher.

In the meeting with businessmen I mentioned earlier, one person asked a very pertinent question. He wondered what use chartered accountants, tax advocates, consultants were of in the new dispensation.

He was right in asking the question. This was because the tax professionals' main duty has always been considered to be representing you before the tax officer and getting the assessments completed with minimum damage. Now that assessment work has reduced, are we professionals required at all? If so, for what?

Over the past years, assessment work required less and less of professional inputs. The quality of representation required has reduced to low levels. It was one's ability to get things done, so to say, which counted. And this skill was not difficult to acquire. Quite often, the professional became redundant.

Since technical competence - the knowledge of law and its application to day to day work - had become less important to assessment work, there was much less urge for the professional to remain upto date, current. Competence was a victim in the resulting scenario.

Incidentally, the good professional opted out of tax work and sought other areas of work which gave him job satisfaction.

Now that the significance of assessment work has reduced, the tax professional will have to change his style and approach to remain in business. That is good news for you, the taxpayer.

Now, unless the consultant offers quality services, unless he offers services of substance which matter to you, you won't need him.

He will have to remain technically competent and upto date. He should offer you a variety of meaningful services. He should make himself useful to you.

What are the services which you should expect from a good consultant?

• The consultant should offer you assistance in tax planning - saving maximum tax while remaining within the four corners of law.
• The consultant should help you with tax management - so that you fulfill all your legal obligations and avoid penal consequences.
• The consultant should help you avoid legal pitfalls by offering you timely advice.
• The consultant should be able to give you good and sound advice on all issues that matter to you.

All this is generally an ongoing process and can happen during the course of the work round the year - while doing tax audit, preparing your tax returns, discussing advance tax matters etc. Besides, whatever the government has done it has not made the law any simpler. Law remains complex and will evolve in its complex glory. Then you will continually have mindless amendments the like of which were proposed in this year's Budget. Further, acceptance of returns at face value will necessarily involve stringent punishment if you are caught on the wrong foot. In the midst of all this, you can't really do without a good professional.

Over a period of time, I see that the consultant's role will change from doing the rounds of the tax office to more work in your and his office. And spending more time on your work than waiting in the corridors of the Aayakar Bhavan (or equivalent in your city).

The result? Better service to you. More value for your money. More income for him.

And a more fruitful, trusting and profitable relationship between the two of you.

The professional who grabs this godsend opportunity and turns it to his advantage will find a surprise waiting for him: greater meaning in his job, more work to be accomplished, more satisfied clients and a higher income! The one who doesn't will perhaps have to find another job.