Mumbai: A group of 50 senior Indian Revenue Service (IRS) officers has suggested a super-rich tax and a higher levy on foreign companies. This is keep the cash running as part of short-term measures to help the government fight the coronavirus pandemic.
Presentation of ‘Force’
Their suggestions are part of a paper titled ‘Force. The word stands for ‘Fiscal Options & Response to the COVID-19 Epidemic’. The paper has been submitted by the IRS Association to CBDT (Central Board of Direct Taxes) chairman PC Mody.
The paper which has been submitted April 23 says tax relief should be restricted to honest and compliant taxpayers. Those filing returns on time should get benefits. The paper also points out that there have been many instances of non-filing of returns. It also states that there has been increase in non-deductions and withholding of TDS. Then there are cases of under-reporting of tax liabilities through bogus loss claims.
The central government has frozen the inflation-linked allowance for its employees and pensioners. In this move it will save around Rs 37,000 crore.
Increase in tax slabs for super rich
Here are some of the short-term measures suggested in the paper. It has said that the super-rich should be heavily taxed. For those with an income of Rs 1 crore annually, the tax rate should be increased to 40 per cent. Currently this group pays tax at the rate of 30%. The paper states wealth tax should be reintroduced for those with an annual income of over Rs 5 crore. Short-term refers to a time period of 3-6 months.
Increase in surcharge for foreign companies
The paper points out the surcharge introduced in ‘Budget 2021’ on the super-rich may generate only Rs 2,700 crore to the exchequer. There the tax slab should be increased on the super-rich. Individuals having a taxable income of Rs 1 crore are considered as super-rich.
For the medium term 9-12 months time period, the paper has suggested raising additional revenue from foreign companies. By foreign countries the paper has meant those functioning within India. It has said that surcharge on their income should be hiked. Currently companies with an income between Rs 1 crore to Rs 10 crore pay five per cent surcharge.
The officers have also suggested imposing a COVID-19 cess to help mobilise additional revenue. The one-time ‘COVID Relief Cess’ of four per cent can help finance capital investment, as per the paper.
According to an initial assessment made in the paper such a cess can fetch Rs 15,000-18,000 crore for the exchequer, the paper said.