Tax charter: Answer in details, procedures and strict implementationUpdated: Aug 15, 2020 20:15 IST
Twenty-two years after the first Charter on taxpayers’ rights and income tax department’s obligations came into existence, there is promise of these entitlements finally becoming a reality. While the earlier charters were purely voluntary and were not enforceable and remained mostly on paper, the new charter unveiled by Prime Minister Narendra Modi on Thursday has the backing of the Income Tax Act.
With the incorporation of Section 119A in the Income Tax Act, mandating the Central Board of Direct Taxes to adopt and declare a Taxpayers’ Charter 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 way to a mandatory legal requirement, enforceable by law. This is a very positive development.
One looks forward to the Board drawing up not only stringent service delivery standards with specific timelines, but also an effective mechanism for strict monitoring and compliance. The Board should also draw lessons from the reviews of the earlier charters and ensure that tax payers are fully aware of the details of the charter and have an effective redress mechanism for complaints on non-compliance. The government also has to keep in mind the reasons for the failure of the Income Tax Ombudsman and create an effective and independent system of time-bound grievance redress.
It is equally important to ensure that the tax authorities comply with the Charter in letter and spirit. In fact complaints of non-compliance from tax payers should form an integral part of the performance appraisal for the income tax department staff. “The department shall hold its authorities accountable for their actions”, says the Taxpayers Charter. It should also hold them accountable for their inaction or failure to conform to the Charter.
It was in November 1998 that the income tax department first came out with a Taxpayers or a Citizens Charter. It was part of an overall administrative reform programme (similar to the Citizens Charter programme of the United Kingdom) initiated by the Department of Administrative Reforms and Public Grievances ( DARPG) to improve service delivery by all government departments and ministries and bring in transparency and accountability in the administration.
The Income Tax department described the Charter drawn up by it as “A declaration of our commitment to excellence in our service to taxpayers”. The one-page charter promised to be a) fair, b) helpful and c) efficient. Under its promise of efficiency, for example, the department said “it would acknowledge all communications from taxpayers on the spot and in any case within seven days and furnish final replies within 30 days”. It promised to redress all complaints within 30 days, issue refunds within 30 days of determination, and also keep all personal and business information/materials furnished to the department, confidential.
The promises, however, remained unfulfilled-- in fact a review of the Citizens Charter programmes of various departments and ministries, done by the Indian Institute of Administration in 2008, at the behest of DARPG, made scathing observations about the poorly drawn up charters and an even poorer implementation. Subsequently, many departments reviewed and revised their Charters. The Income Tax department too revised it in 2007, again in 2010 and subsequently on April 29, 2014. However, two factors -- absence of statutory backing and the taxpayers’ lack of knowledge of the Charter -- allowed the income tax officials to often ignore the promises made. In fact a letter written by the Central Board of Direct Taxes in January 2014, asking assessing officers to respect the Citizens Charter in respect of TDS matters, is a case in point.
Now that the Charter has been enshrined in the Statute, will it usher in a tax regime that respects the taxpayer and guarantees a fair deal, devoid of corrupt or unfair practices? The answer lies in the way the details are drawn up , the procedures and mechanisms provided and the strict implementation of the Charter.