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The Central Board of Direct Taxes (CBDT) has issued charge sheets to three senior Indian Revenue Service (IRS) officers and has divested them of their current responsibilities for their role and complicity in the preparation of the "tax hike" report 'FORCE' which advocated imposition of wealth tax, inheritance tax, and a Covid-19 Surcharge on taxpayers.
The Finance Ministry on Sunday had slammed the report released under the aegis of the Indian Revenue Service Association (IRSA), terming it ill-conceived and ordered an inquiry. It felt that the report created panic and tax policy uncertainty in the already stressed economic conditions in the country.
The three officers against whom action has been proposed include Prashant Bhushan, General Secretary of IRSA; Prakash Dubey, Director DOPT and Joint Secretary, IRSA; and Sanjay Bahadur, a 1989 batch IRS officer. They have been asked to give written reply for their action and admit the fault or face inquiry and further action.
Sources said that the preliminary inquiries have shown the role of the three officers against whom the charge sheets have been issued and thus they have been divested of their current charges.
The CBDT has said on Sunday that it never asked IRS Association or these officers to prepare any report on taxation and no permission was sought by the officers before going public with their personal views & suggestions, which it felt was a violation of extant Conduct Rules.
Government sources said that these senior officers, despite having more than 30 years of service, failed to exercise due care and went on to misguide the 50 young officers.
"Government would have definitely given due consideration to suggestions made by the young officers. However, in this case, the reports, instead of being sent to the government through official channel, these senior officers of rank of Principal Commissioner misguided them and went public with report which created panic and tax policy uncertainty in the already stressed economic conditions in the country," an official source said.
Among other suggestions the Indian Revenue Service Association in its report titled Fiscal Options & Response To COVID-19 Epidemic (FORCE) had suggested the imposition of wealth tax on the super rich, with net wealth at least Rs 5 crore and a one-time COVID relief cess of 4 per cent.
It said that the "so-called super rich have a higher obligation towards ensuring the larger public good".
The tax officers' body said they can be taxed through two alternative means, for a limited, fixed period -- 3-6 months. It suggested raising the highest slab rate to 40 per cent for total income levels above a minimum threshold of Rs 1 crore or re-introduction of the wealth tax for those with net wealth of Rs 5 crores or more.
Suggesting the imposition of a one-time COVID relief cess, the IRSA said as opposed to surcharges, cess are more broad-based since they relevied on every taxpayer and are likely to mobilise more revenue as well.
The current rate of cess is 4 per cent, including 2 per cent health cess and 2 per cent education cess.
"Thus, 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 report said.