NEW DELHI: The suggestion by young Indian Revenue Services officials to propose higher tax for the rich has landed them in trouble after the Income tax department had initiated an enquiry against them.
In a policy paper submitted to PM Modi, 50 IRS officers have proposed many measures in the wake of Corona pandemic, including income tax rate to 40 per cent for those above annual income above Rs 1 crore, 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.
The paper estimated that the extra revenue generated through COVID cess could add between Rs 15,000 to Rs 18,000 crore to tax kitty.
The suggestion was forwarded by the IRS association and they shared it on social media as part of a policy paper titled “Fiscal Options & Response to Covid-19 Epidemic (FORCE).
However the wealth tax and Corona cess did not go down well with India Inc and it attracted much criticism which was brought to the notice of the Centeal Board of Direct Tax, which order to initiate departmental enquiry against them.
"No permission was sought by the officers before going public with their personal views and suggestions, which is a violation of extant Conduct Rules. Necessary inquiry is being initiated in this matter, " Income Tax department said in series of tweets.
However, IRS officials called this decision "unfortunate" and "harsh".
"The paper clearly mentioned that it is the view of 50 IRS officials and not departmental view. It was done to suggest the ways to increase revenue collection post corona after the PM invited suggestion. The reaction of CBDT is unfortunate and harsh. There are many good initiatives suggested. This will discourage the young officials to come up with any ideation in the future. It has many interesting suggestions, " a senior member of IRS Association said, expressing disappointment over the departmental enquiry.
The paper, suggests several steps the officers think are needed to revive the economy, 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 adding that “In times like these, ‘super-rich’ have a higher obligation towards ensuring the "larger public good”.
The paper also suggests re-introduction of the wealth tax for taxpayers with a net wealth of Rs 5 crore or more.
The paper also had some interesting suggestions like increasing equalisation levy for e-commerce firms’. The proposal is that online companies such as Netflix, Amazon Prime have to pay higher tax 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 as more people are online.