The government will soon introduce a taxpayers’ charter in the Income Tax Act with statutory backing, which will contain their rights as well as obligations, to ensure fairness for all assessees, finance minister Nirmala Sitharaman said on Friday.
Highlighting several steps taken by the government to protect honest taxpayers from unnecessary harassment, the minister said only a very few countries, such as Australia and the US, currently have such charters in place. This is part of Prime Minister Narendra Modi’s broader Atmanirbhar Bharat initiaves.
Speaking at a webinar on the centenary celebrations of legendary jurist Nani Palkhivala, Sitharaman said the Modi government has taken care to reduce the incidence of scrutiny in recent years and cases involving only 0.25% of the number of filers are being scrutinised. The idea is to “trust the taxpayers, rather than asking them to prove their innocence first”.
The charter was proposed in the Budget for 2020-21 in a bid to assuage fears of overzealous taxmen clamping down on honest taxpyers in one pretext or the other. Sitharaman had also proposed steps to remove criminal liability for offences under the Income Tax Act, which are essentially civil in nature.
“An important aspect of ease of living and ease of doing business is fairness. Businesses should have the confidence that things are fair and that the tax administration is efficient. We wish to enshrine a tax payers’ charter in the statute. Our government would like to reassure tax payers that they will not be harassed. Tax harassment cannot be tolerated when we speak about wealth creation,” the finance minister had said.
The government has already decriminalised a host of offences under the Companies Act.
In an article in FE, Mukesh Butani, founder of BMR Legal, had said: “One expects that it (the charter) will enumerate the fundamental rights of taxpayers, and basic standards of services. It is of paramount importance that such enumeration is not merely an abstract statement of ideals like fairness and integrity, but also includes enforceable rights, for example, an efficient and time-bound redressal mechanism for delays in refunds.”
The government has also rolled out the ‘Vivad Se Vishwas Scheme’ to reduce litigation and see finalisation of 4.83 lakh stuck cases, involving “few lakh crore rupees” in appellate forums under the direct taxes category. Under the scheme, a taxpayer would be required to pay only the amount of the disputed tax and will get complete waiver of interest and penalty provided they pay by March 31, 2020. Later, thanks to the pandemic, the government extended the deadline for settling tax disputes under this scheme without paying any interest and penalty to December 31, 2020.