Why A Taxpayers’ Charter Is A Non-Starter

Context: Inherent challenge in the tax system of India diminishes the promises put out by the recent announcement of taxpayers’ charter by the Government of India (GoI).

The reality of Tax System in India: A Critical Analysis

• Ignoring Tax Terrorism: The GoI has instead, looked away from the distress due to tax terrorism and has become harsh in tax collection to create an anti-corruption image.
• For E.g. India slapped tax notices on foreign institutional investors to extract Rs 40,000 crore from them under the tortuous minimum alternate tax (MAT) and that too retrospectively.
• The GoI believes that the opposite of tax terror is not a tax haven.
• Draconian Laws:
• Unhindered power to tax officials: For E.g. Under Section 132 and 132A of the I-T Act, the department can conduct a search a seizure is it has ‘reason to believe’ or ‘reason to suspect’.
• Rigorous Punishment: 

• Under Section 276CC, failing to file tax returns in time attracts rigorous imprisonment for six months to seven years, plus a fine if the tax amount is more than Rs 1 lakh.
• Goods and services tax (GST) impose criminal penalties for simple mistakes to frauds. GST commissioners can arrest people without registering an FIR.

• The imposition of Stiff Targets: Tax harassment cannot ever reduce because the department has been given stiff revenue targets year after year.
• There are even targets for issuing prosecution notices and other penal provisions

Conclusion: To sum up, under this government, tax laws have become more draconian, and the government itself is setting stiff, unrealistic targets for tax officials, who have got more powers to harass us and the charter is just rhetoric.