What is the purpose and role of Indian Revenue Services?

IRS officers serve the Government of India in different capacities/roles. While administering , Direct Taxes through the ITD, they formulate policies, implement such policies and discharge the functions of an investigator, quasi-judicial authority, prosecutor and negotiator of International Agreements etc.

Their main roles could be briefly described as under:

  • Policy Formulation:

The taxation policies are dynamic and keep changing with the emerging needs of the economy and the country. The tax policy is not limited to raising of revenue. As a part of the overall policy of the Government of India, the tax policy also serves as a tool to address several other objectives in the process of development of the country. These objectives may include providing for incentives and disincentives in the target areas/segments of the economy. Appropriate policy interventions in the Direct Taxes are formulated by the IRS officers based upon the experience in the field formation and other relevant inputs from various sources and submitted to the Government through the CBDT.

  • Tax Administrator: Investigator, quasi- judicial authority and prosecutor

Levy and collection of the tax is the main function of an IRS officer in the field formation. Majority of the officers are, therefore, involved in this function in some way or the other. The process of tax collection is mainly driven through the regime of voluntary compliance in which the tax payers have to pay their taxes as per the mandate of the law, following the procedure laid down including • mandatory filing of returns of income or other specified statements. However, there is always a gap between the expected and the achieved level of compliance. Main reason for the gap may include tax evasion through wilful suppression of material facts/ aggressive tax planning or mistakes committed by the tax payers.