The government has dismissed a report by some officers of the Indian Revenue Services (IRS) that suggested higher taxes on high earners and levy of wealth tax to raise resources to battle Covid-19, as it instituted an inquiry in the matter. It is unequivocally stated that CBDT (Central Board of Direct Taxes) never asked IRS Association or these officers to prepare such a report, CBDT said in a statement. It is reiterated that the impugned report does not reflect the official views of CBDT/Ministry of Finance in any manner, the statement said, dismissing the report that was widely circulated on social media.
  1. The report entitled ‘FORCE’, which was released through IRS Association’s website, suggested raising income tax rate to 40% for those who earn over Rs 1 crore a year and re-introduction of wealth tax on those with net wealth over Rs 5 crore.
  2. The report, compiled by a group of 50 officers, also suggested a one-time Covid-19 relief cess of 4% on taxable income of over Rs 10 lakh besides a three-year tax holiday for all corporates and businesses in the healthcare sector.
  3. It estimated that the one-time cess can mobilise Rs 15,000-18,000 crore in tax revenue, which can in turn be used for financing capital investment towards relief work.
  4. 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.
  5. The IRS Association said, “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”.
  6. The report is “ill-conceived” and “an irresponsible act” of a few officers, a finance ministry source said, adding the concerned officials will be asked to explain their conduct to CBDT.
  7. These officers would have to explain the “indiscipline” in their actions and “violation of conduct rules” as officers are specifically prohibited to go to media with their personal views on official matters, the source, quoted above, said.
  8. The group also suggested an increase in surcharge on higher income foreign companies having a branch office or permanent establishment in India, and mooted higher capital gains accruing out of the inherited properties of oversees citizens.
  9. It even advocated a higher rate of equalisation levy or ‘Google tax’ from the 6% in the Finance Bill 2020.