50 IRS officers face probe for unsolicited hike-tax call


NEW DELHI: An annoyed government distanced itself from controversial tax proposals such as a Covid-19 cess and a wealth tax on the rich from a group of revenue service officials, not just rejecting the suggestions but also ordering an enquiry against the officers who released the report on Sunday.

The prompt rebuttal was meant to stop panic among taxpayers, who are already nervous about the future with incomes under stress. The
Indian Revenue Service officers association also offered a clarification that the report did not represent the views of all officers.

The “policy suggestions” titled ‘Fiscal Options and Response to Covid-19 Epidemic’ (FORCE) by 50 young IRS officers was shared on social media through the IRS association’s Twitter account late on Saturday evening with the full report. There were several other less controversial suggestions but the speculation over taxes clearly rattled the government which said the officers had violated service rules by releasing the report to the public.

It quickly triggered a debate and by afternoon, government officials said there was no move to implement these measures nor was the report sought by the finance ministry or the PMO as was suggested by some comments on social media. “It is not the right time to suggest higher levies when the income of salaried and non-salaried individuals as well as businesses has been significantly hit by the pandemic,” said a senior officer.

Sensing a controversy, the officers’ body too sought to distance itself from the report. “The paper FORCE by 50 young IRS officers suggesting policy measures had been forwarded by IRS association to
Central Board of Direct Taxes (
CBDT) for consideration. It does not purport to represent the official views of the entire IRS, or the I-T department,” it tweeted.

Finance ministry officials said the suggestions were “inappropriate” and the government had not asked for any report. They also said the report was contrary to the government’s move to provide support to people during these difficult times.

The CBDT issued an official statement, announcing that an enquiry would be conducted against the officers were associated with the report. “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 and suggestions on official matters, which is a violation of extant conduct rules. Necessary inquiry is being initiated in this matter,” it said.

The young officers, who prepared the report, suggested that in times like these, the so called ‘super-rich’ had a higher obligation towards ensuring the larger public good. The paper recommended that this segment could be taxed through two alternative means, both of which could be imposed for a limited, fixed period of time. It backed raising the highest slab rate to 40% for total income levels above a minimum threshold of Rs 1 crore or re-introduction of wealth tax for those with a net wealth of Rs 5 crore or more. The policy paper had several suggestions and tax relief for sectors hit hard by the Covid-19 pandemic.

“Administratively, the former will be simpler to implement. However, the revenue gain associated with both options should be worked out to see whether the gains attached with the latter option score better in terms of a cost-benefit analysis,” the paper suggested among a string of measures to raise revenues and provide relief to the economy.

It said the additional revenue mop-up through either of the above steps was Rs 50,000 crore and this amount should be placed in a separate kitty, almost like an escrow account.

The government could then identify 5-10 most crucial projects or schemes entailing significant expenditure, which were likely to have a decisive impact on reviving the economy. The costs attached with such projects would be worked out, and these projects should be listed on a government website, accessible to the entire public, the paper suggested.

The paper also recommended several other measures such as a new tax saving scheme such as
Covid Savings Certificates (similar to National Savings Certificates) to mobilise more funds as well as a new scheme for undisputed demand. It also backed the idea of reintroducing inheritance tax, which was in force in the country till 1985.

For the healthcare sector, the paper recommended a complete tax holiday/tax break for the next three years for all corporates, firms and businesses operating in this segment.

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