Income tax officers suggest 40% tax on super-rich, Covid-relief cess
- A group of senior income tax officers have submitted their suggestions to the Central Board of Direct Taxes
- The report said high-income earners still have the luxury of working from home, and the wealthy can fall back upon their wealth to cope with the temporary shock
A group of income tax officers from the Indian Revenue Service (IRS) Association have suggested that the income tax department must impose higher taxes on the super-rich and a Covid-relief cess for all those earning above ₹10 lakhs in order to tackle the economic impact of coronavirus.
According to the suggestion, the highest income tax slab should be raised to 40% from 30% for those earning above ₹1 crore in a financial year. Alternatively, it has also suggested the re-introduction of wealth tax for those with net wealth of ₹5 crore or more.
"Most high-income earners still have the luxury of working from home, and the wealthy can fall back upon their wealth to cope with the temporary shock," the recommendations said adding that the tax should be imposed for a limited and short period of time varying between 3-6 months.
These suggestions are part of a paper titled, 'FORCE 1.0 (Fiscal Options & Response to COVID-19 Epidemic)' submitted to the Central Board of Direct Taxes (CBDT) by a group of 50 IRS officers with recommendations on revenue mobilisation and economic impetus to fight Covid-19.
The paper also suggested that an additional one-time cess of 4% on account of Covid relief (could be called Covid Relief Cess) could help finance capital investment in coronavirus relief work. "The extra revenue mobilized on this account could be between ₹15,000 – 18,000 crores. To mitigate the extra hardship on the middle class, the cess may be made applicable only in cases where the taxable income is greater than ₹10 lakhs," it said.
The officers also suggested starting a new tax-related 'Give it up' campaign similar to that of LPG subsidy where many well-off people voluntarily surrendered their LPG subsidy benefits. "The tax department can encourage the super rich and those willing, to give up at least one tax subsidy/tax deduction/ tax concession for only a year- for e.g. an individual could voluntarily opt for giving up his/her 80C deduction for a year," the suggestions read.
According to the taxmen, tax relief should be restricted to honest and compliant taxpayers, especially those filing returns on time as there have been many instances of non-filing of returns, increase in non-deductions and withholding of TDS apart from rising under-reporting of tax liabilities through bogus loss claims.
For the medium term of 9-12 months, they suggested raising additional revenue from foreign companies operating in India by hiking the surcharge on their income from the present 2% for ₹1-10 crore and at 5% on incomes exceeding ₹10 crore.
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Business NewsMoneyPersonal FinanceIncome tax officers suggest 40% tax on super-rich, Covid-relief cess
First Published:26 Apr 2020, 04:28 PM IST
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