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3 IRS officers stripped of their charge for creating panic with tax hike report

Hindustan Times, New Delhi | By
Apr 27, 2020 10:35 PM IST

The three officers, despite having more than 30 years of service, failed to exercise due care and misguided 50 young officers to prepare the report and circulate it, a government official said

Three senior Indian Revenue Service officials who had played a key role in preparing a report on raising income tax and placed it in public domain have been chargesheeted for conduct rule violations, people familiar with the development told Hindustan Times. They have also been stripped of their charge.

The three officers, according to documents accessed by HT, are Prashant Bhushan, Prakash Dubey and Sanjay Bahadur.

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The action comes just a day after the Finance Ministry distanced itself from the recommendations of the widely-circulated report that had proposed raising income-tax rate up to 40% from 30% for those with income of Rs 1 core per year, reimposing a wealth tax on those with a net wealth of Rs 5 crore, and levy of a one-time Covid-19 relief cess of 4% on those with a taxable income of Rs 10 lakh and above.

Also read: Centre rejects tax hike proposal by IRS officials, calls it ill-conceived

The government had described the report as ill-conceived and irresponsible.

Officials told Hindustan Times that a preliminary inquiry carried out by the government had blamed the three officials.

Prashant Bhushan, a 1988 batch IRS officer, is the general secretary of the Indian Revenue Service Association and is alleged to have placed the report, drafted by a group of young IRS officers, in public domain.

Prakash Dubey, the joint secretary of the IRS Association, and Sanjay Bahadur, a 1989 batch officer, have been charged with getting young income tax officers to prepare a report which they passed on to the IRS Association that ultimately placed it in public domain.

Prakash Dubey was a director in the department of personnel and training while Sanjay Bahadur was the income tax department’s Principal Director Investigation, North East Region.

Also read: At meet with chief ministers, PM Modi’s 5 clear messages on Covid-19 battle

A government official explained that the three officers, despite having more than 30 years of service, had failed to exercise due care and misguided 50 young officers to prepare the report and circulate it.

In this case, the three officials of the rank of Principal Commissioner, instead of sending the government through official channels, misguided the junior officers and went public with it.

“This created panic and tax policy uncertainty in the already stressed economic conditions in the country,” a top government official said, explaining why the government had moved swiftly and firmly to act against the three officers.

Top government officials underscored that the officials had no business circulating reports about an official matter in their personal capacity. They, one of them said referring to the charge sheet issued to other officers, had ended up creating confusion and uncertainty with respect of the policy of the government on income tax rates, which could have an adverse impact on economy, especially when the country is battling a pandemic and the government is keen to ensure a stable tax regime.

It has also been pointed out that the proposals are against the government’s existing policy on taxation.

In the budget this year, the government offered individuals the option of paying lower income-tax rates provided they forgo tax exemptions.

It had earlier reduced corporate tax rates drastically in September, sacrificing Rs 1.45 lakh crore in revenue. Companies were given the choice of opting for a lower corporate tax rate of 22% (15% for newly incorporated companies) provided they don’t seek exemptions.

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