New Delhi: The Modi government Sunday sought to distance itself from a policy paper prepared by 50 IRS officers that called for a Covid-19 cess and taxing the rich to help India recover from the economic impact of the lockdown.
The “impugned” report does not represent the official views of the finance ministry or the income tax department, the Central Board of Direct Taxes (CBDT) said in a statement issued Sunday.
The officers, the statement added, did not seek permission before going public with their “personal views and suggestions”, an act it described as a violation of conduct rules.
“Necessary inquiry is being initiated in this matter,” the statement added.
The suggestions were part of a policy paper titled “Fiscal Options & Response to Covid-19 Epidemic (FORCE)”, which the IRS Association claims was submitted to the CBDT.
The IRS Association, a professional organisation of the service, had also referred to the paper in a Twitter post Saturday.
https://twitter.com/IRSAssociation/status/1254082969083363330?s=19
Among the short-term measures suggested in the paper was either raising income tax rates to 40 per cent for those who earn over Rs 1 crore a year or re-introduction of wealth tax for an income of above Rs 5 crore. Another option suggested was introducing a one-time Covid-19 cess of 4 per cent on a taxable income of over Rs 10 lakh, which it said could help gather up to Rs 18,000 crore. The paper also suggested increasing the surcharge on foreign companies that have a branch office or permanent establishment in India.
The government had introduced a “super rich surcharge” last year but was forced to roll it back within months with relation to capital gains after it negatively impacted market sentiments.
Among the medium-term measures, the IRS officers’ paper proposed an inheritance tax, a levy that was in force in India until 1985.
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‘Prima facia an act of indiscipline’
A finance ministry official who did not wish to be identified said the public release of the paper was an “irresponsible act” of a few officers, adding that, prima facie, it was an act of indiscipline.
The official said the report was released through the IRS Association’s website and Twitter in violation of conduct rules, adding that the report had not been submitted to the CBDT, the finance ministry or the Prime Minister’s Office.
The IRS Association also clarified through a tweet Sunday that the paper had only been forwarded to the CBDT for consideration, saying it “does not purport to represent the official views of the entire IRS, or the IT Dept”.
https://twitter.com/IRSAssociation/status/1254380493753036800?s=19