A roadmap for mutual trust and respect

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 A roadmap for mutual trust and respect

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• The Taxpayers Charter: It is a two-way charter containing 14 revenue obligations and 6 taxpayer duties. Nation-building through a progressive tax policy that honours taxpayers is at the core of the charter. 
• Taxpayer-centric administration - Over the years:

1. 1998 Citizen’s Charter laid the foundation for an institutional framework for protection of taxpayer rights.
2. The Kelkar taskforce in 2002 published an ombudsman framework for accountability of tax department which was not very effective. 
3. The 2014 Tax Administration Reform Commission (TARC) emphasized focus on taxpayers’ concerns. 

• What India has done well, what needs work: 

1. Tax filing requirements, automation of withholding tax, and regular issuance of refunds are a few areas where India has improved taxpayers’ experience. 
2. Privacy and confidentiality, non-coercive measures of tax collection, cross-border procedures, administrative guidance are some areas that need work.

• Global best practices: Other jurisdictions emphasize review of functioning of the office responsible for charter implementation, timely intervention, and grievance redressal. Their charters contain standards such as limits on retrospective tax legislation, public consultation for developing tax policy, and other restrictions and guidance. 
• Guiding principles for India’s charter: India’s charter should be built on a) Presumption of honesty b) Reduction of cost of compliance c) Assistance to taxpayer d) Redressal of grievances d) Tax collection due as per law e) Confidentiality and privacy f) Accountability.
• Presumption of honesty: Taxpayers must be treated as honest unless there is reason to believe otherwise. Prohibition on double jeopardy, right to be heard before an order is issued, and principle against self-incrimination must be built into the charter.
• Cost of compliance: MoUs between ministry of finance and other regulatory agencies, and technologies such as artificial intelligence (AI) can enable pre-filled returns. Pre-filled data should capture capital gains and sources of income. A centralized procedure for faceless assessments and appeals for group entities or families can reduce the cost of compliance.
• Assistance to taxpayer: Timely online assistance must be provided to individuals, small and micro enterprises, senior citizens, taxpayers with disabilities or located in remote areas.
• Redressal of grievances: Quick resolution of grievance is extremely important. Bias should be scrutinized as appropriate. Taxpayer should be sent an apology and token compensation if an officer is found guilty. 
• Enforcing tax due as per law: Non-coercive tax collection should be the norm. Enforcing a judgement debt, attaching bank statements or other coercive measures should be undertaken only in exceptional cases. 
• Confidentiality and privacy: Legal guarantee for confidentiality, thorough investigation of leaks, and rules for tax inspection that protect citizens’ right to privacy are needed.
• Mechanism for accountability: Assessment of performance, and periodic surveys for feedback about taxpayers’ experience and suggestions for enhancement must be carried out. 
• Summary: Reforms including timely online assistance, measures to ensure accountability, fast grievance redressal, confidentiality, and more can go a long way in building trust between the taxpayer and the Revenue department. 

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