Prime Minister Narendra Modi on Thursday unveiled country’s first charter of taxpayers’ rights and duties and evoked a national appeal ahead of 74th Independence Day by asking citizens to introspect the fact that only 15 million in a population of 1.3 billion Indians actually pay income-tax.
PM saidtaxation reforms in last six yearsare centred on three concepts — seamless, painless and faceless – that have reduced complexities, cut tax rates and decreased number of litigations. It made the system more transparent, better compliant and trusting taxpayers, which helped in raising the number of income-tax return filers by 25 million. Currently, there are about 70 million income-tax returns filers.
“This is a big increase. But we cannot ignore the fact that this [growth] is minuscule in a country of 130 crore. In such a large country, out of 130 crore only 1.5 crore friends deposit income-tax,” he said while launching the ‘Transparent Taxation- Honouring the Honest’ platform through video conferencing on Thursday. According to the finance ministry officials, the gap between total number of return filers (70 million) and actual taxpayers (15 million) is mainly because most of the people file zero tax returns.
He asked citizens to introspect and appealed those who could afford to pay tax. “Our introspection is necessary for ‘Atmnirbhar Bharat’ [Self-reliant India]… It’s 15 August after two days, remember those martyrs who sacrificed for Independence, then you will realise — yes, I should also contribute something,” he said in Hindi.
Experts said the taxation system is still complicated and intimidating that dissuades people to voluntarily come under its net. “The system of giving targets of revenue collection to officers must change,” said Daksha Bakshi, head of international tax at law firm Cyril Amarchand Mangaldas.
“We are yet to see measures for more tax payers to come forward. Perhaps measures of how people are going to be scrutinised on the basis of various information reports and transactions related data that the department has gathered needs to be made public for people to understand and assess the risk they face if they did not voluntarily come forward. Those who come forward voluntarily need to be pardoned for past lapses and not be persecuted,” she said.
PM Modi said there is a remarkable change in the approach of the income-tax department, which is increasingly becoming taxpayer-friendly and the platform – ‘Honouring the Honest’ — is the testimony. “This platform consists of major reforms such as faceless assessment, faceless appeal and taxpayers’ charters. The faceless assessment and the taxpayers’ charter have been implemented from today, while the facility for faceless appeal will be available to the people of the country from 25 September, which is the birth anniversary of Deen Dayal Upadhyay ji,” he said.
While technology-driven faceless assessment system aims to end overreach by officials, the charter defines rights and responsibilities of taxpayers. According to the charter, the income-tax department is committed to provide prompt, courteous and professional assistance to the taxpayer. “The department shall treat every taxpayer as honest unless there is a reason to believe otherwise,” the charter said.
According to the charter, the income-tax department shall collect correct amount of tax, respect privacy of the taxpayer, maintain confidentiality, reduce cost of compliance and publish standard for service delivery in a periodic manner. It also expects taxpayers to honestly disclose information, respond in time, pay taxes in a timely manner and keep themselves aware of compliance obligations.
In her budget speech on February 1, finance minister Nirmala Sitharaman had mentined about a taxpayer’s charter as part of ‘ease of living’. “We wish to enshrine in the statutes a ‘taxpayer charter’ through this budget. Our government would like t