An annoyed Govt. distanced itself from controversial tax proposals such as a Covid-19 cess & a wealth tax on the rich from a group of revenue service officials, not just declining the suggestions but also ordering a probe against the officers who released the report on Sunday.

The immediate rebuttal was meant to stop panic among taxpayers, who are already nervous about the future with incomes under stress. The Indian Revenue Service (IRS) officers association also offered a clarification that the report didn't represent the views of all officers.

The “policy suggestions” titled ‘Fiscal  Options & Response to Covid-19 Epidemic’ (FORCE) by fifty young Indian Revenue Service 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 thought over taxes clearly rattled the Govt. which said the IRS officers had broken service rules by releasing the report to the public.

It quickly started a debate & by afternoon, Govt. 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.

A senior officer said that “It is not the right time to suggest higher levies when the income of salaried & non-salaried individuals as well as businesses has been significantly hit by the pandemic".

Sensing a controversy, the officers’ body too sought to distance itself from the report.

It tweeted, “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".

The suggestions were “inappropriate” & the Govt. hadn't asked for any report, said Finance Ministry Officials.

They also said the report was contrary to the Govt’s move to provide support to people during these difficult times.

The CBDT issued an official statement, stating that a probe would be conducted against the officers were associated with the report.

It said that “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 & suggestions on official matters, which is a violation of extant conduct rules. Necessary inquiry is being initiated in this matter".

The young officers, who prepared the report, suggested that in times like these, the so-called ‘super-rich’ had a higher responsibility 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 per cent 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 & 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 & provide relief to the economy.

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

The Govt. 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, & these projects should be listed on a Govt. 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 & businesses operating in this segment.

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