Prime Minister Narendra Modi attending the joint annual conference of the CBDT and CBEC will help only if the tax officials are allowed to work independently and there is no fear of CAG scrutiny hampering their career.
Political influence in the functioning of the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) has been one of the major reasons for the high-handed and anti-taxpayer approach of the tax officials over the years.
This is apparent from the huge tax arrears (according to the income tax department’s own assessment last year, 80% of its arrears totalling Rs 8.28 lakh crore are difficult to recover) and litigation, though the tax demands made to avoid CAG questioning is given as the reason for this.
So, when Prime Minister Narendra Modi inaugurates the two-day annual conference of the top officials of the CBDT and CBEC on June 16, held separately till last year, along with the stricture to adopt a taxpayer-friendly approach, he must also assure them that the government interference in their functioning will be limited only to correcting the errors.
The NDA government has done well by going against the tax department’s views on a number of issues, including that of MAT on FIIs, but the biggest error enforced by the taxman, 2012 retrospective tax amendment, is still in the statute.
While the government needs to infuse transparency in deciding the tax policy issues that could impact the taxpayers in a big way like the retrospective taxation and not introduce them without consultation with the stakeholders, the day-to-day work of the tax officials must be completely free from government intervention.
This will allow them to go after the real tax evaders and do their job efficiently, instead of raising unsustainable tax demands without credible information.
A large part of the earning population in India is either not paying taxes at all, or paying less tax than what is due from them by hiding income — in assessment year 2012-13, only 6 individual taxpayers declared a salary income of over Rs 50 crore and just 18,358 declared a salary income of over Rs 1 crore.
During the conference, which will be attended by 251 officers of the rank of Principal Chief Commissioners, Chief Commissioners and Principal Commissioners from CBDT and 170 from CBEC, the primary job would be to assess the revenue collection performance of the last financial year and draw the strategy for meeting the targets for FY17.
Besides this, the technical sessions of CBDT would cover issues like taxpayer services, new initiatives in e- governance, exchange of information with foreign jurisdictions, investigation into undisclosed foreign assets, litigation management and dispute resolution, paperless assessments, accountability and service orientation.
The CBEC deliberations will focus on areas like business process standardisation and knowledge dissemination, WTO agreement on trade facilitation and best practices, and dispute management.
According to the finance ministry press release, “A Taxpayer Perception Survey will also be released”, and in addition to the technical sessions, “While Author, Columnist, Screenplay writer & TV personality Chetan Bhagat will speak on ‘Taxing with Love’, a panel discussion on ‘Initiatives to improve Taxpayer Services, leveraging social media and Brand building’ will see Adil Zainulbhai, DG, Quality Council of India, Rama Bijapurkar, Market Research Consultant and Shalini Narayanan, Social Media Expert as panelists”.
All this may help, but what will help the most is a change in the government’s approach towards the tax departments.