For many days I was thinking about blockchain at which other places it can be implemented. Before we even think of it, there are certain criterias to use blockchain technology in any area or not.
One of the areas where I am thinking of probable use of blockchain technology is the “Income Tax Ecosystem” of India.
Now before you or any of your team make or come to any conclusion, then I would suggest going through the whole blog then try to comment on it.
This will be a very high level draft version of paper on using blockchain in the Income Tax Ecosystem of India and only applied to salaried professionals. The blockchain technology that can be used or probably used is R3 Corda Blockchain.
So, what happens in India for a professional when his/her fiscal year starts from April month, we need to project our investments and start showing our investment and on that basis tax is deducted by the employer (legally bound) and submitted to the government. However, until you show any investment your tax amount would increase based on your income on a monthly basis. Once you show investment, the tax deduction amount is decreased.
Once again reiterating, that if you submit the proof of investment then your tax deduction amount is decreased. Coming straight to the point, if your investment proof is enough to claim the already deducted tax earlier, then currently there is no provision to get it back in the same day or month or even in the same fiscal year.
Raju has 8 Lacs per annum salary and is working for X company. Now, he didn’t start any investment until July month of the fiscal year. His Y amount is deducted every month till July month, so that total tax amount deducted is 4Y. On 1st August, he submits investment proof so that he should get at least 1Y to his account. But no, he has to wait until next year after he gets his Form 16 and submits to Income Tax portal and then wait for some days and get a return of 1Y.
Don’t you think Raju should get 1Y immediately on the same day or next day?
We will talk about solutions in all the terminology of R3 Corda Blockchain Platform. A few points to mention about R3 Corda Blockchain as below
Click here, to read more about R3 Corda blockchain.
The solution about Raju claiming for 1Y amount should be real-time means should get on the same or next day.
The below steps should be followed to claim 1Y amount by Raju.
Let’s understand more with the help of a diagram.
I hope you are able to understand what I am trying to explain here. There are few things that will be resolved.
Many more points can be added, but again to keep this short and sweet, we will now come to the conclusion part.
Moreover, the whole system could be automated by omitting the 2nd step in the above diagram and instead of Raju, IC will submit the investment proof to ITP. We can put all our burden of claiming tax amount on blockchain technology and thinking more on investments.
Please comment your thoughts on this blog on linkedIn or here below. This will encourage me to write more blogs on such and more topics.
Author Name : Kiran Sagar