The different day, the Prime Minister introduced on tv a taxpayers’ constitution to uphold the rights of taxpayers and be sure that they get a good deal. To the very best of my information, we already had a residents’ constitution drawn up by the earnings tax, although solely on paper. So is that this totally different from what already exists? What occurs to the sooner constitution?
Well, we have now had not one, however a number of charters earlier than, solely they had been referred to as residents’ charters. Taxpayers’ constitution is a extra acceptable nomenclature as a result of the constitution is, in spite of everything, relevant solely to these residents who pay earnings tax. However, one large distinction between the sooner charters and the brand new one is that the sooner ones didn’t have the backing of the legislation; it didn’t have a statutory recognition and was thus not enforceable. Most of the guarantees remained simply guarantees and most taxpayers weren’t even conscious of them.
The new taxpayers’ constitution, alternatively, has the backing of the Income Tax Act and is legally enforceable. Let me be extra particular. With the incorporation of Section 119A within the Income Tax Act, mandating the Central Board of Direct Taxes to undertake and declare a taxpayers’ constitution and “issue such orders, instructions, directions or guidelines to other income-tax authorities as it may deem fit for the administration of such Charter”, the voluntary charters of all these years give option to a compulsory authorized requirement, enforceable by legislation.
It was in November 1998 that the Central Board of Direct Taxes first got here out with a taxpayers’ or residents’ constitution. It was a part of an general administrative reform programme just like the residents’ constitution programme of the United Kingdom, initiated by the Department of Administrative Reforms and Public Grievances (DARPG) to enhance service supply by all authorities departments and herald transparency and accountability within the administration. Under strain from DARPG, all departments introduced out the charters however had little interest in imposing them. In truth, a evaluation of the charters finished by the Indian Institute of Public Administration in 2008 was scathing in its criticism of the charters and their implementation. Charters of most ministries, it mentioned, had been “marked by poor, undefined, ambiguous standards and commitments, carried low visibility and negligible presence not only in public domain but also within the organisation.”
CBDT was no higher. The very first constitution drawn up by it described the constitution as “a declaration of our commitment to excellence in our service to taxpayers” and the one-page constitution promised to be a) truthful, b) useful, and c) environment friendly. Subsequently, CBDT reviewed and revised it in 2007, once more in 2010 and subsequently on April 29, 2014. However, within the absence of statutory recognition, the constitution remained principally unenforced. Now the brand new, stronger taxpayers’ constitution will change the outdated one.
Will the brand new constitution actually assist particular person taxpayers? Will it guarantee truthful play and a corruption-free tax regime?
Along with sure different tax reforms, the federal government has promised that the brand new constitution will herald transparency and accountability; in different phrases, truthful practices and corruption-free tax regime. Whether this promise will get fulfilled relies upon largely on how the federal government goes about imposing them.
Towards this effort, one seems to be ahead to the Board drawing up not solely stringent service supply requirements with particular timelines, but additionally an efficient mechanism for strict monitoring and compliance. The Board must also draw classes from the critiques of the sooner charters and be sure that the taxpayers are totally conscious of the main points of the constitution and have an efficient redress mechanism for complaints of non-compliance. The constitution has promised a mechanism for immediate disposal of complaints. Here, the federal government ought to consider the explanations for the failure of the Income Tax Ombudsman and create an efficient and unbiased system of time-bound grievance redress.
It is equally necessary to make sure that tax authorities adjust to the constitution in letter and spirit. In truth, complaints of non-compliance from taxpayers ought to kind an integral a part of the efficiency appraisal for the earnings tax division workers. “The department shall hold its authorities accountable for their actions,” says the constitution. It must also maintain them accountable for his or her inaction or failure to adapt to the identical. And most necessary, the taxpayers must be made totally conscious of the constitution.
Thus, three necessary elements can contribute to a change within the tax regime: (a) recognition by the earnings tax division of the rights and entitlements of taxpayers, with a dedication to honour them; (b) strict and stringent monitoring of the compliance by the federal government; (c) consciousness of the constitution by all taxpayers. Of course, the constitution expects taxpayers to be trustworthy and pay taxes appropriately.