The Supreme Court has affirmed that our right to privacy is a fundamental right. The jury, however, has warned that such a right is not an absolute right. That this right can be legislated via a law, which is just, and fair, where the purpose of such a law is authentic.
Speculation has been rife that this ruling has implications on the state seeking personal and biometric information in the context of Aadhaar and also whether this impacts the newly implemented Good and Services Tax. The Aadhaar issue is likely to be hotly debated both in courts and social circles, let’s understand if the GST law is under any threat.
Our government has power via the constitution to levy and collect taxes and to make suitable laws for it. The GST law has been implemented to replace about 17 state and Central taxes where its objective is to improve tax collection and administration. This law does not apply to B2C dealings but only regulates B2B transactions.
A consumer, who is an individual, is under no threat of disclosure of any personal information due to GST. Taxes are a significant source of income for the government and tax laws have built in provisions, which allow government departments to seek more information where tax fraud or evasion is detected. All in the interest of compliance with the law. Such information when sought must be just and fair and with reason, so that it protects the interest of the taxpayer.
Privacy and financial transactions are interestingly juxtaposed due to use of technology. PAN information is widely used. A bank account can be created at the click of a button. Payments are processed electronically. Tax filing has gone fully online. Stocks and mutual funds are transacted online. A majority of investments in today’s times can be completed online. The Income Tax law empowers the government to review these transactions.
There are curbs on how much a business can spend in cash. Deposits to bank accounts beyond a certain threshold are monitored. Property transactions are reported when they exceed a certain value. Regulators such as SEBI ask for salary details of top officials and several other information to be made public in case of a listed company. Therefore, the state has in the past and will continue to monitor our financial lives.
What puts this apart from the Aadhaar debate is that this sort of monitoring comes with the purpose of protecting the state from fraud and evasion, and ensuring greater transparency in businesses. Improved administration has a positive impact on businesses and is directly co-related to more compliance.
Interestingly the jury has pointed out that technology poses a unique threat to privacy and the state must put in place a robust system to protect data from infringement from within and outside. While laws are in place for proper collection and administration of taxes, the onus of securing data systems lies in the hands of the government.
It would be preposterous to reject the role of technology in the growth of the economy, but prudent to face the challenges it poses and prepare well for them. (Archit Gupta is the founder and chief executive officer of Bengaluru-based online e-filing website ClearTax)