Suggestion to Increase Tax on the Rich Assessee Rejected by IT Dept

A group of officials of the Indian Revenue Service (IRS) had suggested the Central Board of Direct Taxes (CBDT) that the department should increase the Income Tax Rates Get the details on income tax rates for FY 2019-20 (AY 2020-21). Various rates are provided such as Individual/HUF, Companies, Partnership Firms. Read more on the super-rich assessees of the country. The officials also asked the department to introduce a Covid-19 relief Cess on the assessees having an annual income of more than Rs. 10,00,000.

The IRS officials said that CBDT should increase the tax rate from 30% to 40% on the assessees earning more than Rs. 1 Crore per annum and a wealth tax should be charged on the assessees having an annual income of more than Rs. 5 Crores. “Most high-income earners still have the luxury of working from home, and the wealthy can fall back upon their wealth to cope with the temporary shock” read the recommendations. The suggestions were made in the document titled ‘FORCE 1.0 (Fiscal Options & Response to COVID-19 Epidemic)’. FORCE 1.0 was submitted to the CBDT, by a group of 50 officials of the IRS suggesting measures to counter the outbreak of coronavirus.

Read Also: Latest Official Tax (Income Tax + TDS) Updates by CBDT of India Know about all the latest official updates of income tax and TDS by the CBDT Department. Also, we have included sections, tax notifications, and circulars. Read more

The officials suggested that the introduction of one-time Covid-19 relief Cess chargeable at the rate of 4% will benefit the government to fight coronavirus. “The extra revenue mobilized on this account could be between ₹15,000 – 18,000 crores. To mitigate the extra hardship on the middle class, the cess may be made applicable only in cases where the taxable income is greater than ₹10 lakhs,” it said. IRS also suggested that surcharge applicable on the incomes of the foreign companies in India should also be increased. Additionally, the officials also suggested that the government should start a “give it up” campaign for the LPG Subsidy so that more individuals can be motivated to drop the LPG Subsidies. “The tax department can encourage the super-rich and those willing, to give up at least one tax subsidy/tax deduction/ tax concession for only a year- for e.g. an individual could voluntarily opt for giving up his/her 80C deduction for a year,” the suggestions read.

CBDT has rejected the suggestions made by the officials of the IRS stating that the IRS was never asked to furnish any reports or suggestions to the department. Central Board of Direct Taxes These types of taxes are directly imposed and paid to the government of India. Example of Direct Tax is Income Tax, TDS, Securities Transaction Tax, Fringe Benefit Tax, etc (CBDT) also said that the IRS has not taken any permission from the department about making the suggestions and issuing the reports to the general public and doing so is a violation of the service conduct rules and warned that the department will be investigated properly to look into this matter.

The department said on its Twitter account, “There is some report circulating on social media regarding suggestions by a few IRS officers on tackling Covid-19 situation. It is unequivocally stated that CBDT never asked IRS Association or these officers to prepare such a report. No permission was sought by the officers before going public with their personal views & suggestions, which is a violation of extant Conduct Rules. The necessary inquiry is being initiated in this matter. It is reiterated that the impugned report does not reflect the official views of CBDT/MInistry of Finance in any manner”.