An extension of the lockdown is expected to further hit economic activity that has already come to a halt
(representational image) An extension of the lockdown is expected to further hit economic activity that has already come to a halt Photo: Manisha Mondal | ThePrint
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New Delhi: Raising income tax rate to 40 per cent for those who earn over Rs 1 crore a year, re-introduction of wealth tax, effecting a one-time Covid-19 cess of 4 per cent on taxable income of over Rs 10 lakh, direct cash transfer of up to Rs 5,000 a month for the poor, a three-year tax holiday for all corporates and businesses in the healthcare sector — these are some of the recommendations made by over 50 officers of the Indian Revenue Service (IRS) to help the economy recover from the lockdown.

The recommendations are part of a policy paper titled “Fiscal Options & Response to Covid-19 Epidemic (FORCE), which the IRS Association presented to the Prime Minister’s Office (PMO) and the Union Finance Ministry Saturday, sources in the organisation said. It has also been sent to the Central Board of Direct Taxes (CBDT), the sources added.

The paper, a copy of which is with ThePrint, delves into several steps the officers think are needed to revive the economy, by raising additional revenue without burdening the common man.

“The government needs to spend considerably more to revive the economy and it needs to raise additional revenue, but in ways that must not burden the already distressed common man,” the paper says. “In times like these, the so-called ‘super-rich’ have a higher obligation towards ensuring the larger public good.”


Also read: IAS, IRS, IIS associations ask officers to contribute to PM CARES after Modi govt ‘nudge’


Tax the rich, paper argues

To this effect, the paper recommends raising the highest income tax slab rate, for total income levels above Rs 1 crore, to 40 per cent, or re-introduction of the wealth tax for those with a net wealth of Rs 5 crore or more.

“The government can then identify 5-10 most crucial projects or schemes entailing significant expenditure, which are likely to have a decisive impact on reviving the economy. The government should commit itself to the fact that the additional revenue raised through taxing the wealthy will only and only be utilised for these 5-10 projects or schemes,” the paper argues.

The paper also recommends an additional one-time cess of 4 per cent on account of Covid-19 relief, to be levied on those with a taxable income of more than Rs 10 lakh. The extra revenue generated through this could be between Rs 15,000 to Rs 18,000 crore, the officers estimate.

There should also be mobilisation of CSR funds for Covid-19 relief by extending tax incentives. Corporates, the officers argue, may be allowed to treat the salaries paid to their non-managerial staff during the Covid-19 crisis as part of their obligation under CSR, in order to incentivise continued wages during non-working days.

The paper also recommends a new tax-saving scheme, for example, a Covid-19 savings certificate, in order to mobilise more funds.


Also read: Modi govt ‘weighs proposal’ to allow IRS, IAS officers to work from home even after lockdown


‘Increase equalisation levy for e-commerce firms’

The paper states that since the coronavirus economy is largely a digital/online/e-commerce one, the tax imposed on online companies such as Netflix, Amazon Prime and Zoom, among others, under the equalisation levy or “Google Tax” can be increased from 6 per cent to 7 per cent for their ad services, and from 2 per cent to 3 per cent for e-commerce work.

“The equalisation levy collection for FY 2017-18 was Rs 550 crore and FY 2018-19 was Rs 939 crore,” the paper states. “Going by the growth of business in the sector, the said increase in rate is likely to contribute a good amount of increased revenue. Moreover, since the levy is not part of the Income Tax Act, it would not be subject to the provision of India’s income tax treaties.”


Also read: IAS, IPS, IFS exam could be delayed, UPSC to take call after 3 May when lockdown is lifted


‘Ensure DBT for the poor’

On the expenditure front, the paper suggests a direct cash transfer of Rs 3,000 to Rs 5,000 a month for the most economically disadvantaged 12 crore households over a period of at least six months.

It also argues that the crisis offers an opportunity to expand MGNREGA and make public works programmes such as building of rural roads, public health infrastructure, primary school buildings and the like the focus of the scheme.

“If envisioned and implemented in a targeted fashion, the scheme continues to hold tremendous promise, and can achieve three prized objectives together: provision of income support through employment for the jobless, creation of public infrastructure, and investment in human capital,” the paper recommends.


Also read: Bring governance back on track within 100 days of resuming work, PMO tells ministries


‘Let healthcare sector drive economy’

The paper also states that the government should ensure the health sector serves as the driving force for economic growth for the next year or so.

“From a taxation perspective, a complete tax holiday or tax break is proposed for the next three years for all corporates, firms and businesses operating in the healthcare sector,” it states. “The scope can have an exclusive definition, and must incorporate manufacturing of pharmaceuticals, medical grade masks, gloves, gowns, ventilators, testing labs, construction contractors involved in building of hospitals/primary health centers, etc.”


Also read: IAS edge proves a winner as chief secretaries overshadow political bosses in virus battle


‘Steps to boost consumption’

In order to boost consumption and increase disposable income, the paper recommends measures such as allowing short-term capital loss suffered by retail investors due to the recent stock market slump to be set off from their salary, that is, sparing them any tax liability on the money lost.

It also wants the government to not consider bonuses or any other allowances given to employees with an annual pay of less than Rs 10 lakh as taxable income, to allow the deferral of tax payment by individuals who have lost their jobs for six months or until they find a new job, and providing increased deduction interests over the purchase of houses, automobiles, and electronic items that are made in India.

The paper also makes a slew of recommendations to boost the MSME sector, which, it argues, is bound to be the worst-hit by the crisis. These include a tax moratorium for MSMEs whose total tax liability is less than Rs 5 crore-10 for one year.


Also read: How India’s young IAS officers ensured a smooth lockdown in every corner of the country


 

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62 Comments Share Your Views

62 COMMENTS

  1. I came to India after spending 10 years in US for family reasons. I found a job here and then came to know about this tax structure.

    People often say to me, “Indian tax are so less! See in west they charge 45 to 50% income tax”. And I am like they charge crazy tax but:

    1. I do not have to pay for my children’s education. They are Free.
    2. If I development any major disease, government will give me treatment free of cost.
    3. If I loose my job due to medical issue or any other reason, government will pay me unemployment fund.
    4. Government would not decide when is the age for me to retire, they would be okay even if I am 70 and kicking.
    5. When I finally retire, government will pay me social security for managing my expenses.

    Then people ask me why don’t Indians want to return to India from west. People ask such questions and when they get the answer, they are more furious. One guy even suggested me to move to Pakistan.
    Although it has been 2 months, sometimes I reconsider my decision. I am eligible for PR at Canada and Australia, I might pursue that if I couldn’t fit in few months.

  2. How come the government wave off the loan dues for rich business man in crores and planning to put extra cess tax for middle class people’s monthly salary.

  3. In Force they want to increase the load of taxation; that’s but foolish ness; It might be possible they don’t understand Indian Economy at all, if the try to Beat people , they would be beaten in near future. Modi can’t ever reach to IG or near by.
    Shekhar one thing also I surprised by yours is you Compare Indira to Khilji. Because Khilji was a bloody chap.Indira’s period what at what state economy was. What was condition of Indian Economy was.AFter the1971 War, BDrefugee problem , even for 50 crore population didn’t have sufficient food. Indian agricultural position rose then after, Indian business as good as nothing. Our position in the world underdeveloped country because of three major shocks of war, 1962/1965/1971& drought of 1972 was major.
    Modi got everything ready. Globalised Economy; Computrisation, Highways , GDP growth, well settled Economy, developed everything. What is the addition of last six years.Demonetisation really Khilji decision, after that Indian Economy never got up. In addition is Covid19. Indian Economy is still Agrobased. Not Somany rich, richer or richest like America.So don’t implement it by Force, Beat.

  4. India’s corrupt, incompetent, Kleptocracy Run Colonial-Communist “For Government, By Government, To Government” State preferred to resort to its familiar weapon of convenience , the Fascist Police Bludgeon, with exceptions to the rule of law for its preferred castes, tribes, religions and so on, rather than exercise its non existent brain on finding a solution to the real problem which is the threat to Human Lives and the demolition to the Economy and Way of Life expecting that the suppression of the latter might lead to the suppression of the former(!)
    Now they want to flog a dying horse. The tiny segment of productive capital and manpower in a largely Non-Productive State run Command Economy and Government model. Indian employment has collapsed more due to Modi and Jet Lee’s war on small and medium sized business and Industry with an extremely ill conceived “For Government, By Government, To Government ” GST on top of an even more badly ill conceived “de monetization” to add a fillip to an economy on down turn.
    Modi’s insatiable greed to pamper and hand out obscene increments to his Kleptocrats (Judges, Bureaucrats, Police and Politicians) and doles to his target vote fodder of Dalits, Moslems and other “Depressed Classes” as well as his “Multi Appeasement” polices of competing with a far wealthier and Powerful China to bribe third world countries, run aup a trade deficit with China bigger than India’s defense budget and buy weapons from the remaining four UNSC permanent members with scant regard for what is in the best interests of India defense (not that India has a proper strategy) is destroying India and turning it into a Stalinist Russia or a Nehruvian-Gandhist India!

  5. The IRS being the core of the babudom will suggest everything other than salary cuts for govt employees. When salaries and pensions form the bulk of the outgo of revenues generated by govt it is logical that this head of expense should be targeted first and foremost.

  6. It is time not to increase the tax slab but government should give relaxation in investment so that investors can come to invest in the market ,who have million and millions of dollar in there account which is of no use just lying ideal.
    Let’s put all the money black or white to build the economy.
    More the money circulate in the investment , more it will generate money for all.

  7. The big temples and big masjids who have a lot of money and property should contribute. 10 percent of their net worth should be taken by government. Why should some people keep that money. Modi g please consider.

    • Hello readers, whonly 10% it should be at least 50 and the corrupted should not be spared without panelty and I mean heavy panelty. Good luck India. Regards Amratbhai

  8. If you want to revive the economy, keep the bureaucrats out. The ways suggested by them would retard consumption, close down business and encourage corruption. These would create a fear psychosis in the mind of public and would derail the economy. With only 5% of the population paying direct taxes, the increase in tax rate would be counter productive. The thrust should be to create more employment in rural areas at the door steps of labour, which is otherwise forced to migrate.

    • Any country that wants to progress cannot have any regressive ideas. The bureaucrats ( especially the IAS etc. ) are some of the dumbest people devoid of any meaningful ideas. Mr Modi must reach across party lines to garner the contribution of the smartest people from different fields from all walks of life. Not just the ‘YES’ people who cannot stand up to the PM and prod him to take the proper decision. India is now being presented with a golden chance as businesses are looking for an exit from China and looking for a new ‘home’.
      Taxing the rich and big businesses is certainly not the answer. Finally Mr Modi please don’t listen to the bureaucrats. They have been the greatest hindrance to progress since 1947.

    • Joking there are many living ancestors rented accommodation and very rich. Luckily they are enjoying while owners whom we can say land lords may be starving.

  9. Always tax the rich. That’s the easy way out. But do 10 lacs per annum is rich in urban? The cost of residence, transportation education, Medical, water, power, ……….all these burden makes the middle class more vaulnarable to financial crisis. Also one earner in a large family to be considered in classifying rich and poor. And finally what privileges do the taxed community get from government. After all they do earn more because of their hard work and intellectual. Being rich is like a crime in India.

  10. Why not bring in money parked in Swiss banks? Why not recover the wealth of a sitting parliamentarian and former Cabinet Minister who has amassed wealth equal to 60% of GDP? Why not recover the money from a TN based political family running various businesses, including media? Why should salary people be taxed as already the burden is huge?

  11. It’s failure of income tax officer without using his brain just simply asked to raise tax slab without putting any efforts .

    There are many more buisness man and industries they should be searched and try to collect taxes from themselves .

    Salarised employees are already in very difficult situation because of their increment put on hold and employer have already stared to minise thier wages by utilising thier PL and many more other way around .

    Money inflation rate is on very much on higher side and difficult to manage school fees and other required essentials and on other side foolish income tax officer is suggesting hike of tax slab he must be corrupt officer otherwise he wouldn’t think for this .

    Who is going to check how many corruption are taking by income tax officer .it should investigate on that front as to get more money in order to use such funds for corona virus .

    MP/MLA they should give thier salary as they get everything from government and they don’t need any extra money to run their family . It’s almost free for MP/MLAs.

    No any benefits for salarised employee they always sandwiched between this situation neither they can speak nor they can avoid .

    Government should take early decision and they should corantine those pessengers who travel internationally but who are suffering it’s government mistake as they were not able to make decision early otherwise these situation would not devloped in this country .

    Government is still trying to utilised favor by playing games in this tough situation as well.

  12. Would like to ask these (IRS) citizens * is it a sin to lead a comfortable life, in this country.,without getting additional taxes levied on senior citizens.?Why dont they IRS first target the rich temples who get donations in crores.Why are the trustees of these temples not giving funds to the needy .They are the sinners who are living without any compassion.

  13. Sack these bureaucrats who enjoy all the luxuries while warming their chairs in their air-conditioned offices. Pay them Rs. 32/- per day as was declared by some idiot during the Congress Raj as enough to meet daily expenses and reduce their retirement age to 40 years as they prove to become insolvent by making such stupid suggestions. Make them go out and investigate at the ground level as to how come the so called poor are able to fit ACs, buy LED TVs, refrigerators etc. Investigate politicians and government servants who have made immense wealth in very less time. Also remove the security and abolish the pension of politicians. Tax all farmers whose family altogether has more than 2 acres of land. Stop their subsidies and loan waivers if they have taken such benefits for more than 3 years consecutively. Allow new individuals to become 100% organic farmers in their place. Introduce a system where the government pays back at-least 20% of the tax paid as social security to the tax payers who won’t be able to pay the bank loans , children school fees , medical expenses , insurance premiums if they loose their jobs or retire. ABOLISH THIS 200 YEAR OLD LEGAL SYSTEM and come up with new and more stringent laws. Implement a 100% cashless economy and 2 child policy. No reservations and subsidies should be given if any religion’s total population exceeds 3 Crore in numbers. Revoke all free benefits to people with more than 2 children.Why always and only the 4% tax payers have to suffer whenever the Govt wants money.

  14. This is a classical example of mindset of our tax department and you can think about how they will treat assesse in assessment of tax. In tax department they should compelsory undergo courses on economics, finance, accounting and social studies. These techies just completing competitive exams and scruing the entire system with their egos and high handedness. Govt has to reset it’s thinking of one qualifications for all post ie Civil Service!

  15. It’s a farce F.O.R.C.E, these are few opportunistic IRS officers who are looking for higher incentives in the Times of this present government. If any good economist do the surgery of this report than to our surprises everyone find that except few steps like DBT to poor and one odd others this report is totally farce.

  16. Economists and the RBI should be formulating the policies that the GOI must follow when the economy re-opens. Not IRS babus.

  17. Give them targets to increase tax base.There a millions of professionals & businessmen who evade tax…go after them rather than increasing tax burden on high salaried guys.Easiest way for IRS to collect tax is just to hike the tax, increasing tax base needs hard work, integrity & intellect which almost 99% of them lack.Should check the extent of assets the IRS officers hv themselves.

  18. The last thing that can revive the economy is Government projects using higher taxes. That has never happened in the world.

  19. Taxing people earning 10 lakh is not right. An income of 12 lakhs shall be a normal medium income these days. Therefore taxing limit shall be 15 lakhs.

  20. Tax on online transaction above 50000/-, whether through upi app or through cheque, any transaction with different brackets having different tax rates. Instead of going with old age formula of taxing who earns more.

  21. all those cases where the amount involved is less than 10 crores and which are pending and under dispute should be got settled by suggesting amnesty measures and in the process, such cases would get closed and the government would get recovery of the dues and lot many files which would get prolonged for many decades would get closed, but one thing has to taken care of that there should be a committee of upright personnel for deciding each case and to decide as quickly as possible so that the government shall get the funds early. Similar modus-operandi may be adopted in respect of non-vigilance cases pending with various departments including in banking sector, gst desk etc.,

    officers ought to have suggested for closure of disputed cases up to 10 crores by offering o.t.s proposal and some amnesty measures. similar propositions may be coined in respect of other desks whereby the government shall get lot of amount recovered, besides closure of many files, lest, such file would be carried forward to next and or third generations of the litigants.

  22. There are govt alloted funds forthis crisis plus there are lot of donations taking place but these people will tell that economy is failing affecting the working class.and no one knows to whom all these schemes gonna benifit.

  23. Can i know how 40% is calculated are they talking about surcharge(currently 25% above 1cr) or simple tax which is 30 percent above 10 lac ???

  24. Idea is good, but chronic problem of our country is proper and honest implementation. Where is the guarantee that money will be spent for genuine reason and there won’t be any pilferage.
    Infact if govt starts those proposed and budgeted infrastructure projects immediately lot of problems will be solved.

  25. The government could save crores of rupees if it is willing to take a political decision of cutting the salary and pensions of the elected representatives, and also their perks.
    Taxing the tax payers more without giving them any benifits is not just. It is their hard work which makes their high income and it is not right to punish them with higher taxes and other charges

  26. I feel the best way is to cut govt salaries by 20 percent for one year only .govt must tax farm land above 4 acre a family Of 4 and proportionately, at Rs 5000 per acre as most farm land is in hand of rich people who have made money in last 70 years .Govt must close down loss making psu

  27. Going ba c k to the Congi left era of extracting more from the already paying tax ? Can’t think of producing more and exporting more or saving more from the lethargic Govt sector ?

  28. First of all why to impose higher tax rates and levies on one section of the tax payers and allow another section in the disguise of corporates involved in health care to plunder in the name of tax breaks. Now all these bureaucrats and their god father politicians will launch bogus health care business ventures . This will help them in laundering the ill-gotten wealth and plunder govt coffers in the name of subsidies and tax breaks. Corona has come as a big blessing for the corrupt politiciabs and bureaucrats

  29. India does not need corona to crash the economy. We have IRS officers, they are much better, add to that newspaper columnists who pretend to care for the poor.

  30. Very good guys.. back to same robin hood mindset tax the rich till they get poor.. instead you guys should focus on providing a strong base for industries to grow and employ the poor

  31. Cut salary and benefits of these officers first , it will be big help for India .They will not give such suggestions in future. Government should open up economy Let Market decide .Increase in taxes will drive away business outside country . Learn from American experience after great depression .

    • Sorry bhsi… cutting salary and wages can increas corruption, are you ready and have enough in your pocket to subsidise such activities?

  32. Increase the tax. That is all the advise IRS babus can advise to the government. That will kill the economy for sure. Remember the super rich tax introduced by Nirmala Sitharaman and how the market punished her? IRS fools don’t read news papers or watch market.

  33. One can’t help when people mistake their buffoonery to be wisdom. So poor is the quality of top bureaucracy. Today with no revenue it’s a crime to pay such people salaries when crores are in hunger.
    By such namuna advice they have called upon Modi to unleash deep cut bureaucratic reform the Margaret Thatcher way.

  34. CeaseAllMLAs,MPs,Ministers SecretPropertiesOfKiths&Kin&SecretWifes&Corrupted IAS,IPS,Officials&SwissBankMoneyHoldersFrom1965 onwards.Or killAllSeniorCitizens,TaxPayersWithCovid19ImposeNewTaxesOnThemSiThatTheycantLive!?Increase10CroreLimitsTo20CroresForHonestCitizensAsWealthLimits
    probe all GovtCorruptedEmployeesWealthFrim1965FrimPeonToAllHugherCaders

  35. IRS officers are not business oersons and they don’t know ground rdifficulties of business ,
    1% Banking /Digital transaction tax to be introduced instead of IT ,
    BTT should be refunded to people with transaction below 2lac.
    Cash Payments above Rs 100 should not be allowed ,
    Payments through BHIM/UPI should be promoted to increase digital transaction.
    LTCG on property sale should be at 5%.

  36. Reduction in government expenditure should be done as the first step . It’s high time that the government puts an end to the enormous expenditures on Raj Bhawan’s and similar wasteful legacies of the past. This is the best opportunity to identify and do away with such expenses which may also include unnecessary travel.

  37. For how long will Income Tax be the panacea whenever the Govt wants money. 40% for the rich, 30% if you are doing well in your career… The hardworking middle class always bears the brunt, doesn’t it? They come up the hard way in life and if they are successful, the government makes sure that their wealth is normalised.

  38. Trust the bureaucrats to screw up anything they touch. Imbibed with leftist education, they are just leeches sucking the life blood of the country and its citizens. Having never done a honest days work, they enjoy the freebies the most. Just mark this-taxes for those above 1 crore income and no allowances for those under 10 lacs actually keep bureaucrats out of the austerity measures yet while appearing to be so concerned for the country.

  39. Are there only 50 IRS officers in the country? No. Then what is the “interest” of an association which is not “official” ? Regressive and shows the mindset of the kind of governance they must have faced when they entered service! Its a mirror for the present generation to see what red tapism menat and what Inspector raj was!

      • Cut red tape. Open up for investment and sell the PSUs. Economy expands. Same tax rate will bring more money.

        Chanakya said that long time ago.

      • Why only rich people then……govt should eradicate the faltu expenditure things………rich people to be tax 40% is nonsense……it’s not govt sector it’s private… management has to work day night to earn profit…..

    • This is rubbish. Why always honest tax payers have to suffer. Has govt ever though of individuals employed in private sector and their hardships. What mechanism decided by these 50 retired IRS for those who won’t be able to pay the bank loans , children school fees , medical expenses , insurance premiums once people loose their jobs. These guys are just good for nothing they will hard press who is already suppressed and stressed.

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