The Central Bureau of Direct Taxes on Sunday, April 26 ordered an inquiry against 50 Indian Revenue Service (IRS) officers who suggested a COVID-19 cess and higher income tax rates for rich in India through a policy paper. The suggestion came in the backdrop of economic crisis due to COVID-19 lockdown.
The suggestions were mentioned in a policy paper titled ‘Fiscal Options & Response to Covid-19 Epidemic (FORCE)’, which the IRS Association sent to the Central Board of Direct Taxes (CBDT).
Almost 50 young IRS officers submit policy suggestions for reviving India’s economy, post COVID 19.#IRS: committed to help build Nation’s economic immunity.@PMOIndia @nsitharamanoffc @Anurag_Office @FinMinIndia @IncomeTaxIndia pic.twitter.com/vZVqd9HG5S
— IRS Association (@IRSAssociation) April 25, 2020
‘It is reiterated that the impugned report does not reflect the official views of CBDT/Ministry of Finance in any manner,’ the Income Tax Department mentioned in a statement.
The IRS officers did not seek permission before going public with their ‘personal views and suggestions’, an act described as a violation of the code of conduct that most government employees are supposed to follow, the statement pointed out.
‘Necessary inquiry is being initiated in this matter,’ it added. The policy paper suggested either increasing income tax rates to 40 per cent for those who earn more than ₹1 crore annually or re-introduction of wealth tax for an income of above ₹5 crore.
‘In times like these, the so-called ‘super-rich’ have a higher obligation towards ensuring the larger public good,’ the paper argued.
Another alternative included the introduction of a one-time COVID-19 cess of four per cent on a taxable income of over ₹10 lakh, which could mop a whopping amount of ₹18,000 crore.
The paper recommended raising the surcharge on foreign companies with a branch office or permanent establishment in India.
As part of medium-term measures, the IRS officers’ paper recommended an inheritance tax which was in force in India until 1985.
A ‘super-rich surcharge’ was introduced by the government last year but was rolled back within months after it negatively affected the market sentiments.
Distancing itself from the proposals put forward by the IRS officers, the government said that the public release of the paper was an ‘irresponsible act’ of a few officers and called it an act of ‘indiscipline’.
The government also said that the report was released publicly through the IRS Association’s website and Twitter and had not been submitted to the CBDT, the finance ministry or the Prime Minister’s Office.
The IRS Association then clarified that the paper had only been sent to the CBDT, adding that it ‘does not purport to represent the official views of the entire IRS, or the IT Dept’.
The paper FORCE by 50 young IRS officers suggesting policy measures had been forwarded by IRSA to CBDT for consideration. It does not purport to represent the official views of the entire IRS, or the IT Dept.
— IRS Association (@IRSAssociation) April 26, 2020
