Govt calls rogue IRS panel's super rich tax proposals 'irresponsible'

The government has not taken kindly to a report released by a body of Indian Revenue Service (IRS) officers, in which it has suggested among others a 40 per cent tax on super rich, to tackle with drastic fall in revenue owing to coronavirus outbreak in the country. Finance ministry sources have termed the report named as 'FORCE' as ill-conceived in the difficult time of coronavirus pandemic and the act of releasing the same in the media through IRS Association's Twitter handle and website as 'an irresponsible act' of few officers.

Finance Ministry sources said that neither the IRS Association nor any group of officers mentioned in the said report were ever asked by the government to give any report on the subject.

In fact, say the sources, 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 from going to the media with their personal views on official matters without taking prior sanction or the permission of the government.

The Chairman of the Central Board of Direct Taxes (CBDT) has been directed by the government to seek explanation from these officers for writing such 'ill-conceived views' in public without having any authority to do so.

Meanwhile, the CBDT has said that it has never asked IRS Association or these officers to prepare such a report. "No permission was sought by the officers before going public with their personal views and suggestions on official matters, which is a violation of extant Conduct Rules. Necessary inquiry is being initiated in this matter," it said in an statement issued late in the evening.

Finance  Ministry sources said that so far as the suggestions given in the report are concerned, they do not reflect views of the CBDT or the Finance Ministry in any manner whatsoever. They say that people should completely disregard such a report.

Sources in the Finance Ministry said that the government is doing its best to provide relief and liquidity into the system and ease the lives of people in these trying times. The report released by the IRS Association suggests that the "super rich" have a higher obligation towards ensuring the larger public good, and therefore, this segment of the population can be taxed through two alternative means, both of which can be imposed for a limited, fixed period of time. The report suggests that either the highest slab rate be increased to 40 per cent for total income levels above a minimum threshold of R 1 crore or the government should re-introduce the wealth tax for those with net wealth of Rs 5 crore or more.

The report further suggests a levy of an additional one-time cess of 4 per cent on account of COVID Relief (could be called COVID Relief Cess) to finance capital investment in COVID Relief work. At present, the rate of cess is 4 per cent (including 2 per cent Health Cess and 2 per cent Education Cess). This move would help the centre mobilize Rs 15000-18000 crores additional revenue, says the report adding that to mitigate the extra hardship on the middle class, the cess may be made applicable only in cases where the taxable income is greater than Rs 10 lakhs.

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