New Delhi | Jagran Business Desk: In wake of the coronavirus economic fallout, around 50 Indian Revenue Service (IRS) officials of the Income Tax Department have recommended the government to raise income tax for those who earn over Rs 1 crore a year and reintroduce the wealth tax.
However, the Central Board of Direct Taxes (CBDT), which is the apex policy making body for direct tax policies, said it has never asked IRS Association or these officers to prepare such a report and no permission was sought by them before making the report public.
“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,” it tweeted.
“No permission was sought by the officers before going public with their personal views & suggestions, which is a violation of extant Conduct Rules. Necessary inquiry is being initiated in this matter,” it added.
In a report submitted to the Centre, the IT officials had suggested a one-time COVID-19 cess of 4 per cent on taxable income of over Rs 10 lakh and direct cash transfer of up to Rs 5,000 a month for the poor.
The report has been named as ‘Fiscal Options & Response to Covid-19 Epidemic (FORCE)’ and it has been sent to the Prime Minister’s Office (PMO) and the Union Finance Ministry.
Jagran.com has accessed the copy of the report in which the IT officials have stated the economy of the country has been hit hard by the coronavirus pandemic and the central government needs to raise additional revenue to revive it. “In times like these, the so-called ‘super-rich’ have a higher obligation towards ensuring the larger public good,” the report said.
Asking the government to provide relief measures, the IT officials have proposed some short (3-6 months) and medium (9-12 months) term measures to raise additional revenues for the Centre to help deal with the COVID-19 outbreak.
Here’s what the officials proposed in their report:
Taxing the wealthy:
The officials have proposed the government for a higher tax regime for ‘super-rich’ taxpayers. They stated that a surcharge had recently been raised, and the fact that the additional surcharge was only expected to generate a mere Rs 2,700 crores in additional revenue, this may not be a feasible step in terms of potential revenue impact.
They stated that this segment is taxed through two alternative means both of which can be imposed for a limited, fixed period of time. One, raise the highest slab rate to 40 per cent for those total income above Rs 1 crore from 30 per cent at present; and two, re-introduce wealth tax for those with a net wealth of Rs 5 crore.
Direct cash transfer for the poor:
The officials have proposed a direct cash transfer of Rs 3,000 to Rs 5,000 a month for the most economically disadvantaged 12 crore households over a period of at least six months.
“A sustained income stream for at least 6 months is a must v/s a one-time contribution, as providing a safety net and a sense of assured income for at least some time for those who have lost their livelihoods is of critical importance for boosting consumption,” the paper read.
Tax on income of foreign companies in India:
The officials have also proposed the government to increase the tax on the income of foreign companies in India. They have asked the government to increase the surcharge paid by them. Currently, foreign companies pay a surcharge of 2 per cent of their net income is in the range of Rs 1 crore to Rs 10 crore, and at 5 per cent on incomes exceeding Rs 10 crore.
COVID relief cess:
The officials said that an additional one-time cess of 4 per cent on account of COVID Relief (could be called COVID Relief Cess) could help finance capital investment in COVID Relief work.
The extra revenue mobilized on this account could be between Rs 15000 – 18000 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 Rs 10 lakhs, the officials stated.
Mobilisation of CSR Funds for COVID relief:
The officials said that must mobilise the tax incentive for corporate social responsibility (CSR). “Those companies who are undertaking the COVID relief activities under CSR should be allowed to claim as expenditure incurred for the purpose of business deduction section 37 for FY 2020-21 only. This incentive helps in mobilising CSR funds for disaster management. The COVID relief activities should be specifically defined under section 2. The amendments in section 2 and section 37 can be considered,” the officials said in their report.