INCOME TAX DEPARTMENT

honouring-honest-taxpayer-faceless-seamless-and-anxieties-among-the-executors

Honouring honest taxpayer: Faceless, seamless and anxieties among the executors

Former Congress Minister of Finance P Chidambaram, as part of one of his 'noble' schemes, had aspired to ensure 'minimum human intervention' in tax assessment and execution. In a way, he wanted a faceless tax administration system. He couldn't execute it though he efficiently played the system to maximize his political fortunes.

Working on this 'noble' scheme, the NDA government has purportedly come about with a scheme  branded as "honoring the honest taxpayer."

Time will tell whether the scheme really succeeds in its mission. But it has already triggered some anxieties among the executors.

IRS officers are feeling helpless and angry over the government stereotyping them as dishonest following the government's decision to turn the tax administration into a seamless and faceless network-centric operation without any personal contact whatsoever. They feel that the dignity of their service has been compromised by their seniors who have failed to convince the political dispensation that not all IRS officers are corrupt and that the entire IRS shouldn't be treated in the same manner. They are disheartened that PM Narendra Modi has used expressions like "setting, jaan-pehchan, collusion, harassment, etc" to describe the functioning of the IRS, while the other organs of the state like judiciary, police, lawmakers, and businesses have been spared the 'honor.' They believe that the PM's stand on the IRS is a biased one and may be motivated by his own helplessness to clean up the system as promised by him to the voters for ‘a corruption-free India’.

It is argued that the new network-centric faceless operation requires unstinted cooperation and support of IRS officers, who are already grappling with the current system-based functioning that has not yet stabilized and is a cause of grievance for the taxpayer and the tax officer alike.

It is also argued that the timelines given for implementing the new setup may not be practical as the assessees may not be ready since many businessmen still maintain manual books and network connectivity in remote areas is poor? It is feared that lawless assessees may find a handle not to comply in the absence of tax authority in their vicinity.  It is argued that the general assumption of an honest taxpayer and a dishonest tax officer is flawed and is based on crowd-pleasing stereotypes.

It is further argued that the element of a hurry, visible in the full-fledged extension of the e-assessment scheme without stabilizing the functioning of the existing ReACs, may prove its bane like the scheme of demonetization/remonetization. It is suggested that "we should have seen at least one full cycle of the result, taken feedback and understood the problems of all stakeholders, officers, taxpayers, taxpayer representatives before making this full-fledged extension. We should have seen whether the officers are able to understand the complex issues without proper representations, whether both sides are capable of understanding each other merely by written submissions. We should have tried to form a unanimous view of the Department on each issue using the existing ReACs set-up. Up till now, all the system related work was related to accounting, electronic calculations, etc. Taking over of this work by the CPCs has resulted in very good results. But the work which required human intelligence which depends on the ingenuity of the officer can not be easily taken over by the system without giving full regard to the human aspects."

It is further recommended that the "selection of cases using CASS is one such aspect of work which requires human intelligence. CASS is still not very effective despite being implemented for more than 10 years. Investigation and framing an assessment require intelligence, drive, motivation and perseverance besides an understanding of complex issues. We may have built a system that is capable of handling a faceless assessment. But have we readied the manpower who is required to execute it? Have we trained it? Have we improved their reading, writing skills, computer skills? Have we ensured that they are ready and willing for this change? Have we studied how the breaking of a wholesome task (which gives recognition to the officers) into components (being executed by anonymous entities) will still motivate the officers? Since the success of this scheme requires success in all these aspects, a study of these aspects and a calibrated approach on their execution would have led to better results".

Since these suggestions have followed much after the government announced its decision, it is unlikely they may be heeded to. Only the failure of the announced scheme may prompt the government to step back and work out innovations to make the scheme succeed.

(By Rakesh Ranjan)

25 Aug 2020
feeling-of-being-left-out-disenchanted-it-officers-write-to-cbdt-chairman

Feeling of being left out: Disenchanted IT officers write to CBDT Chairman

The Joint Council of Action Income Tax Employees Federation has raised certain issues on the implementation of the Faceless Assessment Scheme especially its impact on the jobs of employees. Though the organized praised that the CBDT’s structural changes by faceless assessment and other statuary changes on August 13, 2020, in bringing Prime minister Narendra Modi’s vision into reality for more transparency and better taxpayer service. But it expressed its apprehension as well.

The Joint Council of Action Income Tax Employees Federation writes a letter saying, “Had the department taken us into confidence before bringing the said announcement the feeling of being left out would not have been there among 97 percent of work-force.”

It also says, “We are also certain that the CBDT would ensure that no employee is made redundant in the process and existing vacancy would be filled up with due promotion and recruitment.” 

18 Aug 2020
honouring-honest-taxpayer-faceless-seamless-and-anxieties-among-the-executors

Honouring honest taxpayer: Faceless, seamless and anxieties among the executors

By Rakesh Ranjan 25 Aug 2020

Former Congress Minister of Finance P Chidambaram, as part of one of his 'noble' schemes, had aspired to ensure 'minimum human intervention' in tax assessment and execution. In a way, he wanted a faceless tax administration system. He couldn't execute it though he efficiently played the system to maximize his political fortunes.

Working on this 'noble' scheme, the NDA government has purportedly come about with a scheme  branded as "honoring the honest taxpayer."

Time will tell whether the scheme really succeeds in its mission. But it has already triggered some anxieties among the executors.

IRS officers are feeling helpless and angry over the government stereotyping them as dishonest following the government's decision to turn the tax administration into a seamless and faceless network-centric operation without any personal contact whatsoever. They feel that the dignity of their service has been compromised by their seniors who have failed to convince the political dispensation that not all IRS officers are corrupt and that the entire IRS shouldn't be treated in the same manner. They are disheartened that PM Narendra Modi has used expressions like "setting, jaan-pehchan, collusion, harassment, etc" to describe the functioning of the IRS, while the other organs of the state like judiciary, police, lawmakers, and businesses have been spared the 'honor.' They believe that the PM's stand on the IRS is a biased one and may be motivated by his own helplessness to clean up the system as promised by him to the voters for ‘a corruption-free India’.

It is argued that the new network-centric faceless operation requires unstinted cooperation and support of IRS officers, who are already grappling with the current system-based functioning that has not yet stabilized and is a cause of grievance for the taxpayer and the tax officer alike.

It is also argued that the timelines given for implementing the new setup may not be practical as the assessees may not be ready since many businessmen still maintain manual books and network connectivity in remote areas is poor? It is feared that lawless assessees may find a handle not to comply in the absence of tax authority in their vicinity.  It is argued that the general assumption of an honest taxpayer and a dishonest tax officer is flawed and is based on crowd-pleasing stereotypes.

It is further argued that the element of a hurry, visible in the full-fledged extension of the e-assessment scheme without stabilizing the functioning of the existing ReACs, may prove its bane like the scheme of demonetization/remonetization. It is suggested that "we should have seen at least one full cycle of the result, taken feedback and understood the problems of all stakeholders, officers, taxpayers, taxpayer representatives before making this full-fledged extension. We should have seen whether the officers are able to understand the complex issues without proper representations, whether both sides are capable of understanding each other merely by written submissions. We should have tried to form a unanimous view of the Department on each issue using the existing ReACs set-up. Up till now, all the system related work was related to accounting, electronic calculations, etc. Taking over of this work by the CPCs has resulted in very good results. But the work which required human intelligence which depends on the ingenuity of the officer can not be easily taken over by the system without giving full regard to the human aspects."

It is further recommended that the "selection of cases using CASS is one such aspect of work which requires human intelligence. CASS is still not very effective despite being implemented for more than 10 years. Investigation and framing an assessment require intelligence, drive, motivation and perseverance besides an understanding of complex issues. We may have built a system that is capable of handling a faceless assessment. But have we readied the manpower who is required to execute it? Have we trained it? Have we improved their reading, writing skills, computer skills? Have we ensured that they are ready and willing for this change? Have we studied how the breaking of a wholesome task (which gives recognition to the officers) into components (being executed by anonymous entities) will still motivate the officers? Since the success of this scheme requires success in all these aspects, a study of these aspects and a calibrated approach on their execution would have led to better results".

Since these suggestions have followed much after the government announced its decision, it is unlikely they may be heeded to. Only the failure of the announced scheme may prompt the government to step back and work out innovations to make the scheme succeed.

(By Rakesh Ranjan)

feeling-of-being-left-out-disenchanted-it-officers-write-to-cbdt-chairman

Feeling of being left out: Disenchanted IT officers write to CBDT Chairman

By IndianMandarins 18 Aug 2020

The Joint Council of Action Income Tax Employees Federation has raised certain issues on the implementation of the Faceless Assessment Scheme especially its impact on the jobs of employees. Though the organized praised that the CBDT’s structural changes by faceless assessment and other statuary changes on August 13, 2020, in bringing Prime minister Narendra Modi’s vision into reality for more transparency and better taxpayer service. But it expressed its apprehension as well.

The Joint Council of Action Income Tax Employees Federation writes a letter saying, “Had the department taken us into confidence before bringing the said announcement the feeling of being left out would not have been there among 97 percent of work-force.”

It also says, “We are also certain that the CBDT would ensure that no employee is made redundant in the process and existing vacancy would be filled up with due promotion and recruitment.” 

honouring-the-honest-pm-modi-launches-platform-for-transparent-taxation

Honouring The Honest: PM Modi launches platform for Transparent Taxation

By IndianMandarins 13 Aug 2020

Prime Minister Narendra Modi, on 13 August 2020 at 11 a.m., launched the platform for ‘Transparent Taxation- Honoring The Honest’ via video conferencing. He underlined that the new reform will instill a sense of fearlessness among honest taxpayers who play an important role in national development.

The launch aims at initiating major tax reforms that would bring transparency in tax systems and empowering taxpayers.

The Income Tax Department carried out several major tax reforms in recent years. Last year the Corporate tax rates were reduced from 30 percent to 22 percent and for new manufacturing units, the rate was reduced to 15 percent. Dividend distribution Tax was also abolished.

In addition to a reduction in tax rates IT Dept emphasized on simplification of direct tax laws. Several initiatives were taken for bringing in efficiency and transparency in the functioning of the Department. This includes bringing more transparency in official communication through the newly introduced Document Identification Number (DIN) wherein every communication of the Department would carry a computer generated unique document identification number. 

Similarly, to increase the ease of compliance for taxpayers, IT Department has moved forward with the prefilling of income tax returns to make compliance more convenient for individual taxpayers. Compliance norms for startups too were made simpler.

With a view to providing for the resolution of pending tax disputes the IT Department also brought out the Direct Tax Vivad se Vishwas Act, 2020 under which declarations for settling disputes are being filed currently. To effectively reduce taxpayer grievances/litigation, the monetary thresholds for filing of departmental appeals in various appellate Courts were raised.

IT Department also undertook measures to promote digital transactions and electronic modes of payment. The IT department appeared keen on taking the initiatives forward and efforts were made to ease compliances for taxpayers during the Covid times by extending statutory timeliness for filing returns as also releasing refunds expeditiously to increase liquidity in the hands of taxpayers.

Today’s launch on Tax Reforms by the Prime Minister signifies that the journey of direct tax reforms would continue.

cbdt-to-start-e-campaign-on-voluntary-compliance-of-income-tax-for-2018-19-from-july-20

CBDT to start e-campaign on Voluntary Compliance of Income Tax for 2018-19 from July 20

By IndianMandarins 19 Jul 2020

The Income Tax Department is all set to start an e-campaign on the voluntary compliance of Income Tax for the convenience of taxpayers from July 20, 2020. The 11 days campaign ending on July 31, 2020 focuses on the assessees/taxpayers who are either non-filers or have discrepancies/deficiencies in their returns for the FY 2018-19.
The objective of the e-campaign is to facilitate taxpayers to validate online their tax/financial transaction information available with the I-T Department, especially for the assessees for FY 2018-19 and promote voluntary compliance so that they do not get into notice and scrutiny process etc.

This e-campaign is being run for the benefit of the taxpayers. Under this e-campaign, the Income Tax Department will send email/sms to identified taxpayers to verify their financial transactions related information received by the I-T Department from various sources such as Statement of Financial Transactions (SFT), Tax Deduction at Source (TDS), Tax Collection at Source (TCS), Foreign Remittances (Form 15CC) etc. The Department has also collected information related to GST, exports, imports and transactions in securities, derivatives, commodities, mutual funds, etc., under information triangulation set up and data analytics.

It is stated that data analysis has identified certain taxpayers with high-value transactions who have not filed returns for AY 2019-20 (relevant to FY 2018-19). In addition to the non-filers, another set of return filers have also been identified wherein the high-value transactions do not appear to be in line with their Income Tax Return.

Under the e-campaign, the taxpayers will be able to access details of their high-value transaction-related information on the designated portal. They will also be able to submit an online response by selecting among any of these options: (i) Information is correct, (ii) Information is not fully correct, (iii) Information related to another person/year, (iv) Information is duplicate/included in other displayed information, and (v) Information is denied. There would be no need to visit any Income Tax office, as the response has to be submitted online.

cbdt-allows-one-time-relaxation-for-e-filed-itr-verification

CBDT allows one-time relaxation for e-filed ITR verification

By IndianMandarins 14 Jul 2020

The CBDT has extended one-time relaxation for verification of tax return for the Assessment Year 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20, which are pending due to non-filing of ITR-V form and processing of such returns.

A circular by the CBDT says that a large number of electronically filed ITRs still remain pending with the Income Tax Department for want of receipt of a valid ITR-V Form at CPC, Bengaluru from the taxpayers concerned.

CBDT has permitted verification of such returns either by sending a duly signed physical copy of ITR-V to CPC, Bengaluru through speed post or through EVC or OTP. Such verification process must be completed by September 30.

"In law, consequences of non-filing the ITR-V within the time allowed is significant as such a return is/can be declared ''Non-est'' in law, thereafter, all the consequences for non-filing a tax return, as specified in the Income-tax Act, 1961 (Act) follow," it said.

irs-officers-in-the-eye-of-the-storm-report-suggestive-in-nature-govt-feels-going-public-violates-service-rules-

IRS officers in the eye of the storm: Report suggestive in nature, govt feels going public violates service rules?

By Rakesh Ranjan 28 Apr 2020

The three senior IRS officers- Prashant Bhushan (IRS:1988), Prakash Dubey (IRS:1989), and Sanjay Bahadur (IRS:1989) have been charge-sheeted by the government for playing a key role in preparing a report on raising income tax and placing the report in the public domain. The three enthusiast officers have also been stripped of their charges.

They have been charge-sheeted for service conduct rule violations. However, people from the service say that the report prepared by these enthusiast officials is “suggestive in nature” and “does not adversely criticize the policy” of the government. Moreover, it was a collective view of the IRS association.

It may be underlined that there have been many instances when All India Services officers have been expressing their views suggesting the government by means of social media and writeups in newspapers.

Recently over six hundred IAS officers from particular baches and up to certain ranks were asked to provide suggestions to deal with COVID-19 pandemic. They provided suggestions to the government based on their hands-on experience which reportedly proved to be quite useful.

In fact service rules say that a public servant should not come up with any matter, issue or idea in public through media or by any means which adversely criticizes or influences government policy. It should also not be motivated as well.

Reportedly, the officers utilized the time of lockdown to prepare a report that is suggestive in nature. It is by no means criticism or influences any policy. What appears to have gone against them is sharing it via twitter and email adding to the discomfort and displeasure of an elected government that has already been handling an increasingly complex and unforeseen COVID-19 crisis.  

If some top sources are to be believed the only issue that goes against these officers is that the government must have been considering additional taxes but the reaction of the general public to the policy paper was so adverse that now the government can not even think about raising taxes. Further, instead of making it public had they put up the report to the government through the proper administrative channels none could have objected to the efforts of these enthusiast officers.

Government officers are often criticized for lack of creativity but if they come up with any such idea, they are penalized which discourages their creative intent. 

ALSO READ: Direct tax collection unrealistic without revision: Who is to be blamed?

It is alleged that these three officers had failed to exercise due care despite having more than 30 years of service and misguided 50 young officers to prepare the report and circulate it.

Bhushan and Dubey are General Secretary of the IRS Association respectively whereas Bahadur has been charged with getting young income tax officers to prepare the report. Dubey was a director in the department of personnel and training while Bahadur was the income tax department’s Principal Director Investigation, North East Region.

(By Rakesh Ranjan)


cbdt:-gill-gets-additional-charge-of-dg,-investigation,-delhi

CBDT: Gill gets additional charge of DG, Investigation, Delhi

By IndianMandarins 28 Feb 2020

CBDT under the Department of Revenue on February 28 assigned the additional charge of coveted posts to several senior IRS officers. Accordingly;

  1. H B S Gill (CCIT, Delhi) was given additional charge of Director General Investigation, Delhi. The post fell vacant on the retirement of Harish Kumar.
  2. Ajay Kumar Chauhan (Principal CCIT, Bhopal) was given additional charge of CCIT, Indore vice D P Haokip.
  3. Arvind Kumar (CCIT- I, Chennai) was given additional charge of CCIT-III, Chennai vice Mrs Uma Singh
  4. Kuldeep Moorti Bali (CCIT- TDS, Kolkata) was given additional charge of CCIT-V, Kolkata vice Lav Chandra Joshi Ranee.

alarming-trend-in-direct-tax-collection:-hitting-the-target-vs-missing-the-bus

Alarming trend in Direct Tax collection: Hitting the target Vs Missing the bus

By IndianMandarins 10 Jan 2020

While re-calibrating and fixing direct taxes collection target for FY 2019-2020 at Rs 13.35 lakh crore, CBDT chief P C Mody had said last year that it was difficult but achievable. But even after the completion of three quarters of FY 2019-2020 the collection figures of Direct Taxes is nowhere close to it.

Indianmandarins has reliably learnt that on completion of third quarter (ending 31.12.2019) the all India collection of Direct Taxes is far less (- 6%) than the collection as compared to the corresponding period last year. The deficit is primarily attributed to the weak performance of metro cities. The down trend may be shown as follows:

Mumbai: (-5%)
Delhi: (-10%)
Bangalore: (-7%)
Chennai: (-2%)
Jaipur: (-20%)

It is to be seen whether CBDT would be able to hit the target of Rs 13.78 lakh cr or even maintain the previous year’s figure. The collection figures are clear indicator that relatively smaller cities have to play critical role in the wake of weak contributions by metro cities and country's commercial capitals.  


FACTS AND FACETS:

  1. FY 2019-2020: In view of historical growth rate in collections in the past three years FinMin had initially set the at Rs 13.78 lakh crore for FY 2019-20. After Budget deliberations it was re-calibrated and fixed at Rs 13.35 lakh crore.
  2. FY 2018-2019: I-T department had collected Rs 11.37 crore during FY 2018-19 against its initial target of Rs 13.80 lakh crore, a shortfall of around Rs 83,000 crore or 7.4 percent of the Rs 12 lakh crore collection target. The collection was, however, 18.3 percent higher than FY 2017-2018.
  3. The revenue collection targets are set by the Union Finance Ministry in consultation with CBDT which frames policy for the IT Department.
  4. The direct tax collection bucket comprises personal income tax, securities transaction tax and corporate tax.
  5. In 2019 FinMin Nirmala Sitharaman’s move of bringing almost all the companies in the lower tax net was widely appreciated by the business world.

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