The Central Board of Direct Taxes has rejected a report by Indian Revenue Services (IRS) Officials that suggested to charge tax at 40 per cent to those earning over Rs 1 crore. The report proposed raising the income tax rate to 40 per cent for those earning over Rs 1 crore a year for a limited time period. It also proposed the reintroduction of wealth tax for individuals with a net wealth of Rs 5 crore and the imposition of a one-time COVID-19 cess of 4 per cent on taxable income of over Rs 10 lakh to mobilise revenue in the aftermath of the pandemic.
In an official statement, the CBDT said, “there is some report circulating on social media regarding suggestions by a few IRS officers on tackling COVID-19 situation. It is unequivocally stated that CBDT never asked IRS Association or these officers to prepare such a report.”
The CBDT further said, “No permission was sought by the officers before going public with their personal views and suggestions on official matters, which is a violation of extant Conduct Rules. Necessary inquiry is being initiated in this matter. It is reiterated that the impugned report does not reflect the official views of CBDT/Ministry of Finance in any manner.”
Justifying the 40% tax, the report said that “most high-income earners still have the luxury of working from home, and the wealthy can fall back upon their wealth to cope with the temporary shock. In view of several European economists, taxing the wealthy would be the most “progressive fiscal tool”, as wealth is far more concentrated than income and consumption.” However, the report proposed that such a tax should be levied for a limited period.
The report by IRS officials also suggested that inheritance tax, which was abolished in 1985, should be brought back to reduce the concentration of wealth, widen the tax base and enhance revenue. It further proposed that equalisation levy or ‘Google tax’ should be raised by 1-7 per cent for ad services and 3 per cent from 2 per cent for e-commerce to earn revenue from online services that have flourished during the pandemic. Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds.