No tax on India's super rich — government issues an inquiry against 50 IRS officers who released the 'FORCE' report

CBDT has issued an inquiry against the 50 IRS officers involved in the FORCE report which proposed taxing the super rich in India to collect revenue to combat the effect of coronavirus on the economyPexels

  • The Indian government and its various agencies have disavowed the ‘FORCE’ report which proposed a wealth tax on the super rich as well as a 4% Coronavirus cess.
  • The Central Board of Direct Taxes (CBDT) has said that an inquiry has been issued against the 50 Indian Revenue Service (IRS) officers who were involved with the report.
  • The IRS Association (IRSA) and the Income Tax (IT) Department claim that the report does not represent their views even though it was released through their official Twitter account.
A policy paper suggesting that a wealth tax and a 4% Coronavirus cess should be levied on the super-rich has been disavowed by four departments of the government.

The finance ministry, Central Board of Direct Taxes (CBDT), Indian Revenue Service Association (IRSA) and Income Tax (IT) Department collectively claim that no permission was sought before the report was made public.

This is despite the fact that the paper titled Fiscal Options and Response to COVID-19 Epidemic ( FORCE) was released from the IRSA’s official Twitter handle. The CBDT now launched an inquiry against the 50 IRS officers who authored the report, for violating conduct regulations.

“No permission was sought by the officers before going public with their personal views and suggestions on official matters, which is a violation of extant conduct rules. Necessary inquiry is being initiated in this matter,” said the agency in a statement.

A finance ministry official told The Print that the paper was an ‘irresponsible act’ and ‘an act of indiscipline prima facie’. Concurring with the official statement, he said that the report had not been submitted to the CBDT, finance ministry or the Prime Minister’s Office for review before going public.

The outrage
The FORCE report suggested levying a 40% tax on people with an income over ₹1 crore or a wealth tax on those earning more than ₹5 crore.

“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,” said the report.

It proposed that the resulting revenue should be blocked off by the government to invest into five to ten of the most crucial projects, which could help revive the Indian economy.

In addition, the report also suggested a 4% COVID-19 relief cess on anyone earning more than ₹10 lakh that could garner ₹15,000 - ₹18,000 crore in tax revenue. The collection would, in turn, be used to finance capital investment for relief work.

The recommendations triggered a fierce debate, both online and offline, on whether or not a global pandemic was the right way to issue higher taxes since more businesses and salaried individuals are already facing a cash crunch. The lockdown has left many with lesser remuneration as salaries get cut and business slows down.

According to the report, the ‘super rich’ had a higher obligation toward the larger public good during such trying times, which is why the higher tax was suggested.

It’s unclear whether this is an act of scapegoating or a genuine violation of the rules since the original Tweet has not been removed and it took the IRSA a whole day to refute it.

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