TAX SYSTEM FOR DEVELOPING COUNTRIES
IMPLEMENTATION AND CONTROLS
IMPLEMENTATION (not required
for transactions below Rs. 25,000)
Outlines: The proposed implementation/control system revolves around under
mentioned tools and implements:
1.1. Creation of
“Transaction Voucher” data and creation of desired reports.
1.2. Transaction Vouchers preparation and filing in quadruplicate
to be customary
practice to ensure compliance with the proposed tax system.
1.3. Multiple level compliance and verification of the
“Transaction Voucher” data and
creation of desired reports.
1.4. Supplementary inputs for reconfirmation of transaction vouchers data from
bankers, financial channels and other entities.
1.5. Advanced software/systems to be employed for creating individual records
creating variance reports besides generation of flags in respect of
Creation of a Tax Cell equipped with on-line computerized data processing
and automatically generated variance reports as well as flagged violations to initiate necessary actions as and when required.
1.6. Police functionaries to have authority to check Tokens and report status
authorities whenever required.
1.7. Citizens to be encouraged to report suspected Token violating to tax
authorities on voluntary basis.
Transaction Voucher: To consist of four copies (White,
Green, Red and Blue).
2.1. Issued By:____________NIC____________NTN/Token
2.2. Issued To:____________NIC____________NTN/Token
White Copy: Issuer
Green Copy: Receiver
Red Copy : To be signed
and mailed directly to Tax Authorities by Issuer.
Blue Copy : To be signed
and mailed directly to Tax Authorities by
2..4. Issuer/Receiver to have option to either directly mail red/blue copies
signing or electronically submit the same using their NTN/Token numbers
2.5. Corporate entities may use NTN number if Token number is not assigned to
Multiple Transaction Vouchers:
Transactions undertaken at multiple levels shall use more than one set of
“Transaction Vouchers”. For example:
3.1. Commodity imported by a corporate body.
3.2. Commodity handed over to whole sale dealers.
3.3. Commodity sold to retailers.
3.4. Commodity sold to consumers.
In this case first “Transaction Voucher” shall be issued by the Corporate
body, second by the whole sole Dealer and third by the Retailer.
The data received through “Transaction Vouchers” shall undergo under mention
authentication and data logging routine.
4.1. Downward Verification:
Records based on “Red” copy to constitute “Downward” authentication.
4.2. Upward verification:
Records based on “Blue” copy to constitute upward authentication.
4.3. Supplementary data to be obtained from record of financial transactions
Token using following tools/implements:
Cheque/bank draft/pay order payments.
Funds Transfer through
Money Order transfers.
House rental records.
disbursements, repayments and write off records.
L C Records.
Record of repeated transactions of below Rs. 25,000 aimed at bifurcating
large dealings into multiples of smaller denominations.
Overseas inputs wherever
Transaction Voucher Analysis:
Advanced software/hardware combination equipped with data analysis and
stimulation models based on (1 out of 2), (2 out of 3) or (3 out of 4)
techniques besides any other simulation techniques may be used to create
variance reports and generation of flags.
Tax authorities shall undertake detailed evaluation of violations and impose
penalties as applicable. The legal procedures shall also be initiated and
contested b y tax authorities wherever in order.
All confirmed violations shall be publicized using routine media channels
firmly identifying violators.