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Government rejects controversial IRS Report FORCE for hiking and imposing super rich tax amidst COVID-19 distress

Amidst corona distress, a controversy has erupted in the country over the raising of income tax rates and imposing super-rich tax and reintroducing certain old dead taxes to boost revenue or collection of taxes and to mobilise revenue in the aftermath of the pandemic.

A bad idea has come into the market even though the government rejects it.

On 25th April, 2020 the IRS Association, the body of IRS officers of the country, informed that almost 50 young IRS officers submit policy suggestions for reviving India's economy, post COVID-19. It is further informed that The paper FORCE (which stands for 'Fiscal Options & Response to COVID-19 Epidemic') by 50 young IRS officers suggesting policy measures had been forwarded by IRSA to Central Board of Direct Taxes (CBDT) for consideration. A 43-page Report called ‘FORCE’ is released for public suggestions by the IRSA.

It is further clarified by the IRSA that the report does not purport to represent the official views of the entire IRS, or the Income Tax department.

On April 26, CBDT clarified that it never asked the 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.

The CBDT has said that some report circulating on social media regarding suggestions by a few IRS officers on tackling COVID-19 situation was never asked by it.

It is reiterated that the impugned report does not reflect the official views of CBDT/Ministry of Finance in any manner.

Before that when the report was first published, many news channels and media reports including social media started circulating the news of government's plan to hike the tax rates, the introduction of COVID-19 cess, inheritance tax, wealth tax, etc. based on the Report of IRSA to the government. Many started criticizing the move of hiking the tax rates when the economy and the businesses are struggling to survive due to lockdown and halt of operations amidst COVID-19 pandemic.

The IRSA had also released the covering letter for submission of the report to the CBDT which is dated 23.04.2020. The letter addressed to the Chairman & the Members of the CBDT which states that the report was prepared as the CBDT had sought feedback from field formations across India on the ideas for revival across various sectors of the economy.

This tweet is not available in the IRSA tweeter account hence the same is not displayed.

The government denied such reports and clarified that it never asked for a report and also stated that inquiry being initiated against errant officers.

The tweet from the income tax department/CBDT is reproduced below-

It is reported that an inquiry has been ordered by the President of India under Rule 14 of Central Civil Services Rules, 1965. 

Even though the government has denied the report and the opinions are held to be personal of those IRS officers which the government does not endorse but this made one thing clear - the mindset with which the bureaucrats work.

Such capricious behaviour not only dampens the image of the country but also creates a state of confusion and uncertainty among the people/investors. As we know there are reports that many multinational companies which decided to leave China due to pandemic sees Vietnam as an alternative destination over India. These acts setbacks the government's effort to attract those companies in India.

Nevertheless, the report has come into the public domain and the same is issued by IRS/Income Tax officers cannot be ignored completely since these type of reports or suggestions somewhere definitely influences the decisions of the government.

The 43-page report FORCE has 3 Chapters and 3 Appendices.

The exercise of raising revenue in the COVID-19 crisis be done by economists and finance professionals rather than solely by the revenue authorities. Though they cannot be wrong in their domain but their exercise to this project is questionable. Bureaucrats cannot frame economic policy. They are good in the administration and execution of the policies.

Nevertheless, such an incident is not a good indicator for the country. Both the government and bureaucrats must be more sensitive towards society and refrain themselves from such irresponsible acts. 

Copy of the Report FORCE as released by the IRSA

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