Last week, the Centre announced a new Taxpayer Charter that lists out an income taxpayer’s rights and obligations. Other countries like UK and Australia also have similar taxpayer charters that spell out the rights and obligations of taxpayers.
“What the Taxpayer Charter is trying to do is to emphasise that the tax department trusts the taxpayers,” says Sandeep Jhunjhunwala, Partner at Nangia Andersen LLP. “That is what it is basically meant to do. There does not seem to be anything new in this. Most of the elements have been spoken of in the past by the previous finance ministers.”
Australia and UK have strived to codify their tax charters into an institutional philosophy on how their revenue collecting agencies deal with taxpayers. There are frequent reviews of the implementation of their taxpayer charter by these countries.
In India’s case, there has been no such announcement yet other than a one-page enumerating rights and obligations of a taxpayer, nor does it stem from any legal provision in the Income Tax Act, 1962. The announcement of the charter seems to be an attempt to tone down the adversarial approach that the Income Tax Department has taken in the past with taxpayers. How this works with the new faceless assessment and appeal scheme has to be seen.
“There is a statement (in the charter) to treat the taxpayers as honest,” says Saraswathi Kasturirangan, Partner at Deloitte India. “I can quote this, if I feel that the queries that are being raised (by Income Tax officials) are vindictive and not a positive approach.”
A lawyer, who represents the Income Tax Department in court cases, said revenue targets for income tax officials will deter any meaningful change to the taxpayer’s experience in their dealings with the department.
Saraswathi Kasturirangan of Deloitte India feels that compliance with the Taxpayer Charter is something the Income Tax Department should expect from its officers to make sure that it is adhered to, along with stiff revenue targets.
The practice of high revenue targets has already been flagged by the Comptroller and Auditor General in a 2018 report on the Income Tax Department. This has led to the value of disputed tax demand cases touching nearly ₹10-lakh crore.
“What the government is doing is to make a clear statement of intent,” adds Jhunjhunwala of Nangia. “However, on the ground, it needs to be seen if officers are still driven by revenue targets”.
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