Taxpayer’s charter introduced in Budget 2020 aims to improve ease of doing business and tax administration.

  • Taxpayer’s charter introduced in Budget 2020 aims to improve ease of doing business and tax administration.

  • The Central Board of Direct Taxes adopted the taxpayer’s charter to rule out harassment of all kinds on the taxpayers.

  • The Finance Minister says the said move will ensure the taxpayer’s rights and establish a trust between the taxpayer and the tax administrator.
Talking about the newly introduced Taxpayer’s Charter in her budget speech delivered on Saturday, February 1, 2020, Finance Minister Nirmala Sitharaman says it will ease the life of taxpayers, simplify doing business and bring in a fair amount of transparency and efficiency.

As per the Union Budget 2020, the Central Board of Direct Taxes, the regulating body of direct taxes, will adopt a taxpayer’s charter and will provide directions necessary to implement it.

"An important aspect of both ease of living and ease of doing business is fairness and efficiency of tax administration. We wish to enshrine in the statutes a ‘taxpayer charter’ through this budget. Our government would like to reassure taxpayers that we remain committed to taking measures so that our citizens are free from harassment of any kind," she said.

What comes with the introduction of the Taxpayer’s Charter

The Union Budget 2020 says the Tax Charter has been incorporated in the Income Tax Act itself. Addressing a briefing that followed the budget presentation, she stated that the objective of incorporating the Taxpayer’s Charter is to establish taxpayer rights.

The FM sympathized with the fact that despite the government instructing the tax administrators not to go for face-to-face engagement with the taxpayers, tax officials are found to deal with them as wealth generators and probe them for data. "So, despite the government's effort there are some levels of harassment,” she said.

Sitharaman added that the government is keen to ensure that the taxpayers are honored and respected for their contribution and commitment to nation building.

What is so unique about the Taxpayer’s Charter

At present, only three countries in the world namely Canada, US and Australia have a system in place to protect taxpayer rights.

Sitharaman says that the government never wants to harass taxpayers and hence has adopted this new system. While many taxation experts and economists have welcomed the Taxpayer’s Charter, they say it is important to ensure that it is implemented in spirit. To this end, a significant mindset change is called for both among the taxpayers as well as the tax administrators.

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