The Central Board of Direct Taxes (CBDT) on Monday issued chargesheet to three senior IRS officers under Rule 14 of CSS (CCA) Rules, 1965 over violation of rules and divested them of the current responsibilities. As per reports, the action was taken by CBDT for their role and and complicity in preparing the ‘tax hike’ report titled FORCE which was circulated in the media since April 25.
One of the officers, Prashant Bhushan, is the general secretary of the IRS Association and his wife is a Congress MLA from Begusarai in Bihar. Other officer chargesheeted is Prakash Dubey, currently posted at the DoPT and is the joint secretary of the IRS Association. The third officer Sanjay Bahadur is 1989 batch IRS officer and is currently posted as Principal Director, Investigation, North-East region.
According to ANI, government sources say that despite 30 years of experience in the service, these senior officers failed to exercise due care and misguided 50 young officers. The sources informed ANI that the government would have listened to the young officers and would have given due consideration. However, instead of sending the report to the government via official channel, the three senior officers misguided them and put out the report in public domain creating panic and anxiety.
Initial probe by the CBDT shows that the FORCE report created panic and tax policy uncertainty at a time when India is already going through a difficult economic situation amidst the coronavirus lockdown.
Netizens speculate selective leaking of FORCE report
Following the action taken by CBDT, netizens speculated whether the FORCE report was selectively leaked to certain media outlets before officially being put up by IRS Association to create panic. As Twitter user and lawyer Ketan Bhate pointed out, Shekhar Gupta’s ThePrint published the report on FORCE report on 25th April 2020 and it was shared on social media at 9:08 PM.
IRS Association also retweeted this ThePrint report. Further, the IRS Association shared the report through its official handle over 30 minutes after ThePrint published the story.
In the contentious report, the IRS officers suggested introducing the ‘wealth tax’, over-burdening the rich, and charging an additional 4% cess to bridge revenue deficit caused due to the Wuhan Coronavirus outbreak. As per the 43-page report, the Government can earn up to ₹18,000 crores by implementing the suggested proposals.
One of the recommendations of the report was the introduction of the wealth tax to be charged to those with a net worth of ₹5 crores or more. Besides, the IRS officers suggested levying a one-time 4% ‘COVID Relief Cess’ on individuals with more than ₹10 lac annual income. Moreover, the document also proposed taxing individuals with more than ₹1 crore annual income at 40%, which is 10% higher than the current 30%. As such, the income tax liability on such individuals will be close to 56%.
Along with the above measures, the IRS officers also recommended increased surcharges for foreign companies in India, creation of an amnesty scheme to collect unpaid tax, sanctioning of ‘Coronavirus Savings Certificates’ for investments not more than ₹2.5 lacs for 5 years, taxation of multinational firms making royalty payments to their parent companies and 3% equalisation charge to e-commerce companies.