Budget 2020: What you must know about taxpayers' charter

The Union Budget 2020 announces that the Central Board of Direct Taxes, the direct tax regulator, will adopt a taxpayer's charter and issue necessary direction for the implementation of the same.

So, what is a taxpayers' charter? This is how finance minister Nirmal Sitharaman explained it in her budget speech: "An important aspect of both ease of living and ease of doing business is fairness and efficiency of tax administration. We wish to enshrine in the statutes a "taxpayer charter" through this budget. Our government would like to reassure taxpayers that we remain committed to taking measures so that our citizens are free from harassment of any kind."

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Speaking in the post-budget briefing, the FM Sitharaman said that the taxpayer charter is being incorporated in the Income-Tax Act itself to ensure taxpayers' rights and establish the trust between the taxpayer and tax administrator.

She admitted that despite the government telling the tax administrators that face-to-face engagement with the taxpayers is not necessary, tax officials are dealing with them as wealth creators and they approach them for data gathering. "So, despite the government's effort there are some levels of harassment," she says.

Therefore, the finance minister says that to ensure taxpayers are respected and honoured for their commitment in nation building, the government came up with the idea of a charter of taxpayers' rights. The details of the charter are yet to be finalised.

There are only three countries in the world which have enshrined the rights of the taxpayers - Canada, US and Australia.

Sitharaman says the move is to prove that the intent of the government is never to harass the taxpayers, which is why the government has decided to incorporate the charter in the statute itself.

Dinesh Kanabar, CEO, Dhruva Advisors LLP, said having a charter for taxpayers is welcome and having it enshrined in the Act, is even more welcome. However, he said that it needs to be implemented in spirit and for that, a change in the mindset needs to be made at the ground level.

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