Here's what govt's Taxpayers' Charter promises and expects from income tax payers

PM Narendra Modi launched a platform for honouring the honest taxpayers. One of the key features of the platform is the Taxpayers' Charter which was announced in Budget 2020 by the Finance Minister in her speech.

Transparent Taxation, Honouring the honest: Key announcements by PM Modi
The Taxpayers' Charter launched by Prime Minister Narendra Modi on August 13, 2020 promises to maintain the privacy and confidentiality of income taxpayers and to reduce the cost of compliance with tax laws. The charter lists out the income tax department's commitments to the income taxpayer as well as what the department expects from the taxpayers. According to PMO twitter handle, the Taxpayers' Charter has come into effect from August 13, 2020.

Tax payers can approach the Taxpayers' Charter Cell under the Principal Chief Commissioner of Income tax in each zone for compliance to this charter.

Divakar Vijayasarathy, Founder & Managing Partner, DVS Advisors LLP says, "The taxpayer's charter is a welcome step that enshrines in law the rights and duties of the taxpayers. Though this was known to most of the taxpayers and officials, the introduction of an exclusive charter changes the perception of both the taxpayers and officials from taxpayers being scrutinised as offenders to being viewed as an equal stakeholder."

He further adds, "This government in its approach in various other schemes as well has tried to encourage the population at large towards voluntary compliance and this could well help it to achieve the desired reform in direct tax front. We all witnessed the massive success of the voluntary surrender of the LPG subsidy. The government is efficiently and effectively using the “nudge” philosophy in public policy to motivate the population towards the desired objective. It is noteworthy to mention that this was originally propounded in our 2019 National Economic Survey as well. To derive optimum benefits, these reforms should be followed by consistent efforts to simplify the legislation and removing subjectivity in tax enforcement."

Here's what the taxpayer charter says about its commitment to tax payers.

To provide fair, courteous and reasonable treatment: The tax department will provide prompt, courteous and professional assistance in dealings with the taxpayer.

Treat taxpayer as honest: The income tax department shall treat every taxpayer as honest unless there is a reason to believe otherwise.

To provide mechanism for appeal and review: The tax department shall provide fair and impartial appeal and review mechanism.

To provide complete and accurate information: The department shall provide accurate information for fulfilling compliance obligations under the law.

To provide timely decision: The department shall take decision in every income-tax proceeding within the time prescribed under the law.

To collect the correct amount of tax: The department shall collect only the amount due as per the law.

To respect privacy of taxpayers: The department will follow the due process of law and be no more intrusive than necessary in any inquiry, examination or enforcement action.

To maintain confidentiality: The department shall not disclose any information provided by the taxpayer to the department unless authorized by law.

To hold its authorities accountable: The department shall hold its authorities accountable for their actions.

To enable representative of choice: The department shall allow every taxpayer to choose an authorized representative of his choice.

To provide mechanism to lodge complaint: The department shall provide mechanism for lodging a complaint and prompt disposal thereof.

To provide a fair & just system: The department shall provide a fair and impartial system and resolve the tax issues in time-bound manner.

To publish service standards & report periodically: The department shall publish standards for service delivery in a periodic manner.

To reduce cost of compliance: The department shall duly take into account the cost of compliance when administering tax litigation.

Here's what the taxpayer charter expects from the tax payers.

Be honest and compliance: Taxpayer is expected to honestly disclose full information and fulfil his compliance obligations

Be informed: Taxpayer is expected to be aware of his compliance obligations under tax law and seek help of department if needed.

Keep accurate records: Taxpayer is expected to keep accurate records required as per law.

Know what the representative does on his behalf: Taxpayer is expected to know what information and submissions are made by his authorized representative.

Respond in time: Taxpayer is expected to make submissions as per tax law in timely manner.

Pay in time: Taxpayer is expected to pay amount due as per law in a timely manner.

What is Taxpayers' Charter?
The Taxpayers' Charter was announced by the Finance Minister Nirmala Sitharaman in her Budget 2020 speech. The aim of introducing the charter is to build a trust between a tax payer and the tax administration and reduce harassment. "We wish to enshrine in the statutes a 'taxpayer charter' through this budget. Our government would like to reassure taxpayers that we remain committed to taking measures so that our citizens are free from harassment of any kind," she said during the Budget.

"With the objective of enhancing the efficiency of the delivery system of the Income Tax Department, I propose to amend the provisions of the Income Tax Act to mandate the Central Board of Direct Taxes (CBDT) to adopt a Taxpayers' Charter," FM said.
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