The Taxpayers’ Charter was launched by PM Modi on 13 August 2020. The charter promises to maintain the privacy and confidentiality of all its taxpayers. The charter also promises to reduce the cost of compliance with tax laws. The charter also lists out the IT department’s commitments to taxpayers, and what its expectations from these taxpayers are.
This is a welcome step that enshrines in law the duties and rights of the taxpayers. And while this was known to all taxpayers and officials earlier too, the introduction of this charter will change the perception of both the taxpayers and the officials.
In various other instances too, the government has looked at encouraging the population towards voluntary compliance, and this move might well help to achieve the desired reform in the direct tax front. The voluntary surrender of the LPG subsidy was a massive success too. The government is again making effective use of the nudge philosophy in public policy to motivate the population towards achieving its desired objectives. But to get the maximum benefits, all these reforms should be followed with consistent efforts to simplify legislation and remove subjectivity in tax enforcement.
Here is how the taxpayer charter seeks to commit to its taxpayers.
- Provide fair, reasonable and courteous treatment and prompt assistance when dealing with taxpayers
- To treat all taxpayers as honest unless there is a reason to not believe otherwise.
- To provide a mechanism that will provide for a fair and impartial appeal and review mechanism
- To provide complete, accurate information for fulfilling compliance obligations under the law
- To provide timely decision making and take decisions in the income tax proceedings within the prescribed period as per law
- To collect only that amount which is due as per law
- To follow all due processes of law and be no more intrusive than necessary in cases of inquiries, examinations and enforcement actions
- To not disclose any information that has been provided by the taxpayer to the department, unless it has been authorized by law.
- To hold authorities accountable for their actions
- To allow taxpayers to choose an authorized representative of their own choice
- To provide for a mechanism for lodging a complaint, and a prompt disposal thereof.
- To provide a fair and impartial system that will resolve tax issues timely
- To publish standards for service delivery periodically
- To take into account the cost of compliance when administering tax litigations
In return, there are expectations from taxpayers too.
- They are expected to disclose all information and fulfill compliance obligations
- To be aware of all compliance obligations under the tax law, and to feel free to seek help from the department if needed.
- To keep all accurate records as required by the law
- To be aware of what information and submissions are made by the authorized representative
- To make all submissions promptly as per the tax law
What is the Taxpayers’ Charter?
The charter was announced by our Finance Minister Nirmala Sitharaman, in the budget 2020 speech. The charter aims to build trust between taxpayers and tax administration, and also reduce harassment. The government also wants to reassure taxpayers that they are committed to taking measures that will ensure that citizens are free from harassment of any kind. This will overall increase and enhance the efficiency of the delivery system of the IT department.