IRS officers’ report on funding COVID-19 relief work via tax measures ill-conceived

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The number of COVID-19 cases is increasing with each passing day creating meager and uncertain fiscal balance. Given that a group of 50 Indian Revenue Service (IRS) officers of the Income Tax Department suggested hiking the tax on the super-rich strata of the society

These 50 IRS officers prepared a report called FORCE (Fiscal Options & Response to Covid-19 Epidemic) on policies and suggestions for meeting the challenges in reviving the economy.

However, the CBDT denied that it had ever sought a report from the IRS Association or any other officers, and said it would order an inquiry into the issue. And as per finance ministry sources this report is ill-conceived, and an act of indiscipline, as well as the violation of service conduct rules.

The suggestions offered by the IRS association to mobilize revenues have been divided into two categories:

First category

This category is for a short term lasting for three to six months. Under the short-term ‘Taxing the Wealthy’ category, suggestions have been made to raise the highest tax slab to 40 per cent for people earning ₹1 crore or more in a year or re-introducing wealth tax for those with a net wealth of ₹5 crores or more.

Second category

This category is for a medium-term lasting for nine to twelve months. Under the medium category, it has been suggested to increase the surcharge applicable to foreign companies with higher income having a branch office/permanent establishment in India.

The association also suggested imposing a one-time ‘COVID relief’ cess of 4 per cent. As the cess is the tax on tax the extra revenue mobilized on this account could be between ₹15,000 crores and ₹18,000 crores. To lessen the gravity on the middle class, the cess could be made applicable only in cases where the taxable income is greater than ₹10 lakh. It has also been suggested to bring a new scheme, COVID Saving Certificates (like NSC), to allow tax saving over and above the existing limits.

“It was not even part of their duty to prepare such a report. Therefore, it is prima-facie an act of indiscipline and violation of conduct rules which specifically prohibits officers to go to media with their personal views on official matters without taking prior sanction or the permission of the government. The concerned officers will have to explain their misconduct,” one of the sources said.

The release of such a report in public may be, is an act of ill-conceived notion. As neither IRS Association nor any group of officers mentioned in the said report was ever asked by the government to give any report on the subject.

Jyotika Kumari
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