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The Central Direct Tax Board (CBDT) also ordered an investigation against the officers for making the report public without permission, while sources with the finance ministry said the officers’ views were misconceived.
The document titled ‘STRENGTH’ which stands for ‘Fiscal Options and Response to the COVID-19 Epidemic,’ dated April 23, was sent to CBDT President P C Mody and board members.
In addition to the cessation of the pandemic, the document has suggested imposing higher taxes on foreign companies, reintroducing the inheritance tax, and raising the matching tax, among others.
It was prepared by 50 tax officials after CBDT searched for ideas from field officers on ways to revive the economy and improve revenue collection.
On Sunday, CBDT said an investigation is being launched against the 50 IRS officers.
According to the lead agency, it had never asked the IRS Association or these officers to prepare such a report and did not request any permission before releasing the report.
He also said that the “contested report” does not reflect the official views of the CBDT / Ministry of Finance in any way.
The CBDT statement came shortly after sources said the ministry had ordered Mody to seek an explanation from officers for writing such “misconceptions” in public without having any authority to do so.
“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 the rules of conduct that specifically prohibit officers from going to the media with their personal opinions on official matters without taking a prior sanction or government permission.
“The officers in question will have to explain their misconduct,” said one of the sources.
The document has suggested that tax relief should be limited only to honest and compliant taxpayers, especially those who file returns on time, as there have been many cases of non-filing, increased non-deductions and withholding of TDS, apart from the increase in tax underinformation through sinister loss claims.
A ‘resignation campaign’ like the one carried out for LPG subsidies has also been proposed. According to the suggestion, the tax department can encourage the super wealthy and those willing to give up at least one tax subsidy / tax deduction / tax concession for a year, he added.
According to ministry sources, the government never asked the IRS Association or any group of officers mentioned in the report to submit any reports on the subject.
However, the IRS Association tweeted on Sunday, “The FORCE document of 50 young IRS officers suggesting policy measures had been submitted by IRSA to the CBDT for consideration. It is not intended to represent the official views of the entire IRS or the IT Department. ”
The FORCE document of 50 young IRS officers suggesting policy measures was sent by IRSA to the CBDT for consideration … https://t.co/lsMtVj389X
– IRS Association (@IRSAssociation) 1587902589000
Some of the short-term measures suggested in the document include a super rich tax by raising the highest slab rate to 40 percent for those with an income above Rs 1 crore from 30 percent, and reintroducing the tax on wealth for those with more than Rs 5 crore annual income.
He noted that the surcharge introduced in the 2021 Budget for the super wealthy can generate only Rs 2.7 billion rupees and thus the call to increase it on the super rich. People who have a taxable income of Rs 1 crore are considered super wealthy.
The revenue gain associated with both options should be calculated to see if the earnings associated with the last option perform better in terms of a cost-benefit analysis, the document says, adding that the government can raise $ 50 billion. additional rupees.
For the medium term, the document has suggested increasing the additional income of foreign companies operating in the country. This can be done by raising the 2 percent surcharge on the income of a Multinational Company (MNC) that ranges from Rs 1-10 crore and to impose a 5 percent surcharge on income that exceeds Rs 10 million rupees, he added.
“The surcharge has not been reviewed (for) a long time. Therefore, it is time for a burgeoning market like India, with its huge prospects, to flex its customer base.”
In addition, the document has called for a COVID-19 cessation to be imposed to help mobilize additional revenue. The 4 percent one-time handover can help finance the capital investment, he said.
“The proposed cess can eliminate an extra income of Rs 15,000–18,000 crore. To mitigate additional difficulties in the middle class, the cess may be applicable only in cases where taxable income is greater than Rs 10 lakh,” the newspaper notes. said.
Another suggestion is that the government identify 5-10 projects / schemes that are crucial in terms of investment and those that are likely to have a decisive impact on the revival of the economy. The additional income generated should be used only to finance these identified projects.
“Such visibility into the direct and immediate use of resources is likely to ensure greater resonance and acceptance among taxed subjects, and provide greater satisfaction and a direct sense of contribution to this population,” the newspaper said.
Although the document focuses on income generation, it seeks to ensure that the measures are not a burden on the already distressed common man.
And one way to accomplish this is to have merchants, fruit sellers, stall owners, and small businesses pay income tax, as they “earn lakhs per month and cash income is invisible in any book.” .
Among other measures, the document has proposed that the tax incentive be extended for CSR activities during the pandemic by allowing companies to carry out coronavirus-related relief activities and also allow them to claim expenses incurred as a commercial deduction under Section 37 of the Income Tax for FY21.
The document has also introduced a new tax savings scheme such as COVID savings certificates to the NSC, in which undivided individuals and undivided families can be offered an additional deduction of up to 2.5 lakh made on this online fund with that established in Section 80C.
The amount invested can have a five-year blocking period and can generate interest income for investors in line with what the government pays for various small-scale savings instruments, he said.
To facilitate this, Sections 13A and 13B of Law I-T should be modified to allow political parties and electoral trusts to invest in the aforementioned fund, according to the document.
According to the document, there could also be a new amnesty plan to collect the undisputed claims, as the ongoing Vivaad se Vishwaas Plan covers only disputed claims.
There is a proposal to reintroduce the inheritance tax. It should be noted that said tax regime existed in the country until 1985, when the tax rate varied from 10 to 85 percent.
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