Finance Minister Nirmala Sitharaman tabled the Union Budget 2020 in Parliament on Saturday and announced a Taxpayers' Charter in the tax administration. Sitharaman asserted that the government will not tolerate any form of tax terrorism. She also proposed amendments to the Companies Act, 2013 and other laws that will take away criminal penalties for civil acts.
"Businesses should have the confidence that things are fair and efficient in tax administration. A Taxpayers' Charter will be enshrined in the statute as part of our law. Our government would like to reassure taxpayers that we remain committed to taking measures so that our citizens are free from tax harassment. We are willing to put it into law, tax harassment cannot be tolerated, we mean it," Nirmala Sitharaman told MPs.
A Taxpayer Charter is a unit in a tax department that explains what a taxpayer can expect from the authority and what is expected from them. The aim of the Charter is that of nurturing the relationship between the tax department and taxpayers. Several advanced economies like Australia have a robust Taxpayer Charter for a smooth tax collector-taxpayer relationship.
"Any tax system requires trust. This will be possible only when taxpayers' rights are clearly enumerated. To this end, I propose to amend provisions of the Income Tax Act to mandate CBDT (Central Board of Direct Taxes) to adopt a Taxpayer Charter, the details of which will be notified soon."
FM Nirmala Sitharaman has also proposed to make amendments to the Companies Act, 2013, that will de-criminalise certain provisions of tax laws that are otherwise civil in nature. Similarly, other laws will also be examined where such provisions exist and attempts will be made to correct them.
Earlier, Sitharaman had informed that the Centre will decriminalise the Income Tax Act and the Prevention of Money Laundering Act (PMLA) as part of steps towards making the country a $5 trillion economy. In an address at the Nani Palkhivala centenary celebrations in Chennai, Sitharaman said decriminalising corporate laws, settling tax disputes and rapid privatisation of state-run firms were among the steps the government was taking to achieve the goal.
The Centre has already identified the statutory changes to be made in the Companies Act to decriminalise several procedural lapses and those that do not affect public interest as part of efforts to reduce the rigours of compliance and to improve ease of doing business. About 44 offences under the Act are under consideration for amendment.