Finance minister Nirmala Sitharaman proposed a potentially powerful tax reform. GoI, it seems, will be incorporating a charter of taxpayers’ rights in the Income-Tax (I-T) Act soon. After the US and Canada, India will become the third country to incorporate such a charter in its tax code. If this statutory charter helps change official attitudes, it could be a game changer, for the way in which government departments function.
The road ahead, however, is pretty steep. Much would depend on how serious GoI is in implementing this reform. The problem that Sitharaman has sought to address is intricate. It’s a significant manifestation of India’s low-trust society.
A citizen’s charter for one department is unlikely to fully address this problem. But a beginning has to be made. A charter is necessary for another reason as well. As US taxpayer service advocate reminds us, ‘taxpayer rights are human rights.
The high-handedness of I-T officials against taxpayers has a long history. Overpitched assessments and bogus additions, which officials think nothing of making, spring from a curious mix of anachronistic socialist and feudal values. Some of these date back to the days of the licence-permit raj of the 1950s, when GoI placed stringent controls on the functioning of the private sector. They also reflect the colonial legacy that officials inherited from the days of British colonialism. The British government of India, out of sheer laziness, had entrusted junior officials with vast powers to assess and collect revenue, with hardly any checks and balances. For all these reasons, the I-T department’s current attitude towards businesses, both big and small, is based on distrust, despite the reforms of the 1990s. Demonetisation has only exacerbated this tendency.
Yet, ironically, the department, with all its defects, is the most suited to implement a citizens’ charter. Unknown to most people, it has been at the vanguard of every reform movement in GoI. It was among the first to adopt modern management techniques, particularly, performance measurement and management by objectives. It has won a number of awards for induction of modern information technology in its functioning.
A number of countries have taxpayer charters. Most of these lack statutory recognition. The rights themselves are worded abstractly; an effective enforcement authority gives them substance. Eight rights — to a fair and just tax system; to pay only the correct amount of tax and no more; to quality service; to privacy and confidentiality; to retain representation; to appeal and revision; to be informed; and to have complaints dealt with fairly — figure prominently in most charters.
