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Sunday, April 11, 2021

Introducing A COVID Cess, A 40% Hike In Taxes For The Super-rich Community.

COVID-19 has disturbed the financial balances. To mobilize the resources, a group of tax authorities has given some measures. The measures include a 40% hike in taxes for the super-rich community, introducing a COVID cess, COVID certificates, and also advised initiating a ‘Give it up’ type campaign for tax concessions.

This was the response towards the feedback desired by the Income Taxes’ apex policy-making body, the Central Board of Direct Taxes (CBDT).

Copy of INSTAGRAM POST-9

A group of 50 Indian Revenue Service officers of the Income Tax Department prepared a report of policies. Later, the suggestions to revive the economy from prevailing challenges. The title of the report was FORCE (Fiscal Options and Response to COVID 19 Epidemic). They submitted the report to the Finance Minister and the board plus others. 

Despite that, CBDT has refused the desire of any such report from the Indian Revenue Service Association or any other officers and pitched that they command an inquiry into the issue. 

Two-fold Categorisation

The officer’s proposition for mobilizing revenue comes under two categories. First is short term mobilization, which is for 3 to 6 months and the other is a medium-term for 9 to 12 months. The short term suggests ‘Taxing the Wealthy’ category where suggestions are provided to raise the tax slab to 40 % for those who are earning Rs. 1 crore or more per year, or re-establish wealth tax for those who have a net wealth of Rs. 5 crores or more.

Another proposal suggested is to increase the surcharge on foreign companies or its office or branch established in India. The department proposed an additional amount of separate kitty so that the resources raised by any of the two above mentioned ways are efficiently utilized. The government can identify 5 to 10 crucial schemes/projects which will entail expenditure as significant as likely to have a positive impact on the economy and its revival.

‘COVID Relief’ cess

A proposal regarding imposing one time ‘The IT officials have proposed COVID Relief’ cess of 4%. It will help in mobilizing the amount between Rs. 15,000 to Rs. 18,000 crores. This cess will be applicable only for those whose taxable income is more than Rs. 10 lakhs to mitigate the distress over the middle-class. The IT department has come up with various new schemes. For example, the COVID Saving Certificates, which will allow tax saving over and above the ongoing limits.

Regarding the suggestions for medium-term, which includes the proposal to expand the e-businesses like e-commerce/web services/online streaming companies the opportunity to increase the equalization levy rate by 1% from 6% to 7% for the advertising services and from 2% to 3% for the e-commerce services.

Introducing A COVID Cess, A 40% Hike In Taxes For The Super-rich Community.

 

Note: The Finance Ministry termed the report named FORCE as ‘ill-conceived’ by the, and hence CBDT has asked for an explanation by these tax officers.

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