22 January 2008

My Experiences with the Income Tax Department -- 9
[A single-page version of this blog can be seen here]

Thereís a little postscript to this.

As we mentioned, on 28 November 2003 Mr Sebastian completed his assessment. I had received Rs 100 as payment for the site etc, and paid out Rs 50 to the software developer. Of this Rs 10 was disallowed as expense, so that I had to pay tax on Rs 60 although my income was only Rs 50.

On 2 December 2003 Mr Sebastian discovered that he had committed an error in his original calculation. By his recalculation my income increased by about 22% to Rs 73 and the tax by an equivalent amount. If he continued to have any afterthoughts at this rate, the tax would soon exceed the income and I would have to beg, borrow or steal (probably all three) to pay any taxes plus penalties he thought fit to impose.

Of course, he had committed an error, adding back to my income most of the taxes I had paid. When my representative met him Mr Sebastian refused to be convinced, insisting that there was no error and he had applied his mind. By now we had come to know our man well. It was not that he would not be persuaded. He just liked his persuasion in black and white.

On 17 December 2003 we sent him a note setting out the various additions and subtractions. As was to be expected Mr Sebastianís response was immediate. On 18 December 2003 he sent me a correction of his correction, not just reverting to the figure of 28 November but going a bit below that. We couldnít have spurred him to action faster if we had lighted a fire below his chair.

In previous episodes the attentive reader will have observed Mr Sebastian more or less rewriting the rules of income tax besides being well on the way to inventing a new variety of non-Boolean logic. Now he sees Mr Sebastian engaged in no less revolutionary a task than the reinvention of the science of accounting, a science that had heretofore trudged its way from weary day to weary day, basically unchanged since an Italian monk invented double-entry bookkeeping in the 15th century.

In hushed awe, the reader will ask: "When, if ever, in history has a single man wrought revolutions in so many fields of human endeavour?" The mind's eye rests on Newton and then it scans, in vain, all subsequent decades until it finally settles on Mr Sebastian.

More in the next.

Category: Income-Tax


Philip George
Debunker of Keynesian, monetarist and Austrian economics

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