Why does govt not want tax transparency?

PriceWaterhouseCoopers (PWC), one of the ‘Big Four’ accounting firms, published a report regarding tax transparency, or rather the lack of it, in India Inc. 75 per cent of the survey participants representing businesses employing more than 500 people admitted that they do not publish any report about their “societal contribution” by way of taxes (both direct and indirect). Yet, they agreed that publishing tax transparency reports (TTR) has multiple benefits, such as improving their reputation, creating a positive narrative about themselves in society, and improving shareholder and employee confidence in the company.

Exactly an year ago, Oxfam-India, a now beleaguered NGO, said that the bottom 50 per cent of our population paid 64 per cent of the GST collected in 2021-22 whereas the top 10 per cent contributed only 3 per cent. Two months later, Union Finance Minister Nirmala Sitharaman pilloried its findings in the Rajya Sabha and claimed that between April 2022 and January 2023, 90 per cent of the GST collections was paid by the top 22 per cent of businesses having annual turnover of more than Rs 50 crore. She dismissed Oxfam’s methodology based on consumption estimates of certain food and non-food items while saying that GST being an indirect tax, it was not possible to exactly calculate who paid how much!

In which case, how did her 22 per cent figure in defence of top corporates come by? One would think it was based on specific data inputs. I filed an RTI application with the ministry seeking the names of these business entities, the amount of GST they had paid during the said period, and a copy of all file notings, correspondence and the material facts used to craft the minister’s reply in parliament. The ministry transferred the request to the GST Network (GSTN), which provides the IT infrastructure and services to governments and taxpayers to implement the tax regime.

GSTN replied that I was seeking “personally identifiable information” of third parties and that no public interest would be served by its disclosure. So the request was rejected under Section 8(1)(j) of the RTI Act, which protects personal privacy. As the information is supposedly held in fiduciary capacity, Section 8(1)(e) of the Act was also cited for rejection. Further, Section 158 of the Central GST Act, 2017, was invoked to claim that all such information is required to be kept confidential and a decision of the Central Information Commission (CIC) was cited to buttress this refusal.

GSTN did not bother to refresh its memory that Section 158(3)(l) also permits the disclosure of information relating to a class of taxable persons if the GST Commissioner thinks it is in the public interest to publish it. Nor did it apply its mind to the fact that I was not asking for the sales and purchase data of a GST-registered trader, to which the CIC had denied access.

According to the PWC report, 70 per cent of the survey respondents felt that shareholders were interested in the tax transparency practices of a company while 50 per cent felt that both employees and regulators would be interested in keeping tabs on tax compliance matters. When the corporate sector itself is thus supportive of openness, why does the government want to treat tax-related matters as sarkari secrets?

GST collections are not like Electoral Bonds donations made to political parties that the identity of the contributor must be kept hidden from voters. GST collectors are merely aggregators of this indirect tax acting as intermediaries between the government and thebuyer of a commodity or service. Citizens have the right to know how much is collected by whom.

It is not enough to claim “we are the mother of democracy, we are the mother of democracy” every day. To become a functional democracy, where there is respect for the rule of law, citizens must have the necessary information and effective means to help governments combat tax evasion.