My Personal Experience With Our Extremely Efficient Indian Income Tax System

 

My Personal Experience With Our Extremely Efficient Indian Income Tax System

Shrikant G. Talageri 

 

I am writing this article out of pure frustration, because my fingers are itching to have this on record, and because as a writer in a country with a hyper-bureaucratic and hyper-inefficient system there is nothing more that I can do beyond placing this on record.

I am a purely middle-class person, a mere “bank employee” as critics of my books have chosen to label me when no more concrete and factual criticism was available. My only income all my life was from my bank salary, and now from my pension and my perfectly legitimate savings bank account and my mutual fund SWPs. I have never had other notable sources of income. More pertinently, although tax saving facilities and schemes were always available, and very commonly made use of by salaried people (and also I suppose non-salaried people), I never made use of them simply because ( due to my careless and lazy attitude) I found it tiresome to keep track of them. So I always paid my full income tax as per the rules and never made use of these tax saving facilities (other than those, such as standard deduction, etc., which automatically get applied).

One would think that in a country where extremely corrupt and even criminal elements get away with all kinds of financial shenanigans and massive tax-evasion activities, this would lead to a problem-free life at least in matters of income tax problems.

But then, this is India. I have already written an article about India’s coinage system. This article is about the efficiency of our highly advanced and sophisticated income tax system.

As I said, my full income tax throughout my working life was always directly cut from my monthly salary throughout the year. So here is my dukh-bhari dastan:

1. In the year 2011-2012 (Assessment Year 2012-2013), I worked for 7 months (April-October 2011) in Central Bank of India, Naigaum branch, and was then transferred to Central Bank of India, Mumbai Main Office for the months of November 2011-March 2012.

2. TDS was deducted from my monthly salary and paid to the Income Tax department for all the twelve months:

21080/- April-October 2011 through the TAN No. of our Naigaum branch.

14509/- November 2011-March 2012 through the TAN No. of our Mumbai Main office.

3. However, for some reason, the sum of 21080/- paid through TAN No. MUMC11425B was not taken into account in my TDS by the Income Tax department, and I received a demand notice for 21080/-.

I replied to the Demand notice on 25 June 2013, attaching my copies of my ITR-V acknowledgement and my form 16 for the AY 2012-2013.

As the IT-filing process was manual and not computerized, I submitted all these documents manually to the Income-Tax counter at Bandra-Kurla complex. My reply was acknowledged, accepted, and the matter was therefore closed. In the year 2013 itself.  

 

However, after computerization of the IT-filing procedure, I again received the same Demand notice for AY 2012-2013 six years later in the year 2019, proposing to adjust the amount of 21080/- against my refund amount of 37,256/- for the AY 2019-2020.

After I submitted my response to this Demand Notice, my response was accepted by the Income tax department, vide a "Communication for Issue of Refund Without Adjustment of Demand" dated 15 August 2019.

The communication clearly said:

"On careful consideration of your response and material available on record, the refund amount issued to the taxpayer for the AY 2019-20 is calculated as under:  

Refund amount as per order dated: 37256

Adjustments if any: Nil

Balance Refund Issued: 37256."

So my response to the Demand Notice was officially accepted and the Demand for 21080/- was officially accepted as closed for the second time in 2019.

 

But apparently it was not closed!

Four years later, in 2023 (five years after my retirement and ten years after the first Demand notice) I again received a Demand Notice for the same amount of 21080/- dated 5 September 2023, telling me that my refund of 14503/-  for the AY 2023-24 is proposed to be adjusted against the old "Outstanding Demand" of 21080/- for the AY 2012-13.

This time (due to the extremely complicated nature of the newly computerized/digitized/whatever nature of Income Tax activities), I had to do a lot of running around and taking the help of various people to send my response to this repeatedly repeated demand for Income Tax that I had already paid in full ten years earlier.

Finally, my response was officially accepted and the Demand for 21080/- was officially accepted as closed for the third time in 2019.

 

It is now 2026, and I filed my income tax returns for the assessment year 2026-2027 on 20 July 2026.

And yesterday, 9 September 2026, I received two notices from the Income Tax department. The first notice told me that I was due for an income tax refund of 80130/- or 81330/-. [This was, I must admit, because I wrongly calculated my income tax due while filing my income tax on 19^th July and paid high income tax on a wrong amount, and after I realized my mistake the next day I filed a revised Income Tax which made me eligible for a refund of 80130/-].

The second notice: again that same old Demand Notice of 2013 along with the intimation that my refund will be adjusted “against an outstanding demand”: the original 21080/-, although it does not say if it will be enhanced by adding “interest” etc.

 

In matters of intellectual dispute I never give up. But in the face of a bureaucratic hegemon which can continue to demand payment of an income tax amount already paid 13 years ago in 2013, and even after repeatedly (in 2013, 2019 and 2023) accepting that the demand was incorrect and unwarranted, I give up. There is no need to spoil my health by doing any more running around trying to again settle a matter already settled three times in the last 13 years. I will let the Income Tax department again collect from me an amount already paid 13 years ago.

Apparently, if I do not reply within 21 days, the amount will be deducted from my refund. So be it. I have done charity countless times in my life. One more time will not kill me.

The only thing I am wondering is whether, after having the (whatever) amount deducted from my refund sometime soon, will I continue in future years to repeatedly receive the same Demand Notice again and again once every few years (as long as I am alive) and have to repeatedly pay 21080/-, with or without interest every time?

Having put this down in writing on record, and done my patriotic duty, I will attempt to forget the whole thing for the next few years at least.