No timelines in Taxpayers' Charter; vague compared to Citizens' Charter

The Taxpayers' Charter has left tax officers puzzled whether they will still need to abide by the timelines mentioned in the Citizens' Charter

The Taxpayers' Charter, unveiled by Prime Minister Narendra Modi statuting taxpayer’s rights amid much fanfare over video conferencing on Thursday appears weak and vague when compared to the existing Citizen’s Charter of the Income Tax department that specifies stiff timelines for delivery of services. This has left tax officers puzzled whether they will still need to abide by the timelines mentioned in the Citizens’ Charter or only go by the Taxpayers’ Charter.

While the Taxpayers' Charter only talks about ‘providing timely decisions’ and ‘resolve tax issues in a time bound manner’, the Citizens’ Charter specifies timelines for 16 services including issue of refunds, acknowledgement of communication received, redresssal of grievance etc.

Besides listing the rights and duties of taxpayers’ the Citizens Charter specifies that grievances must be addressed within two months, refunds should be issued within 6 months in case electronically filed, etc.

“It is worse than the earlier version of Citizen’s Charter. There were at least specific timelines for providing service to taxpayer. The Taxpayers' Charter does not mention that and is quite vague,” said a tax officer.

However, a Citizens' Charter is not enforceable by law, while the Taxpayers’ Charter has been enshrined in the statute of the income tax law.

“While it was not enforceable, it gave clear cut timelines and standards of delivery. Internally, if my officer was not delivering service within 30 days, one could pull him up. There was a yardstick against which the officer could be evaluated,” said another tax officer. He added that the current Taxpayers’ Charter there is nothing concrete for a taxpayer to seek redressal against or for a supervisor to punish an officer.

The provisions in the Taxpayers' Charter are not justiciable with respect to trusting a taxpayer or honorable conduct, pointed out a government official. The tax department is unsure whether the citizens charter and the taxpayers charter will run parallelly.

Announced in the budget for 2020-21, Taxpayers’ Charter is aimed to promote voluntary compliance by creating trust between taxpayers and the administration. Giving it in the statute, it is binding on the tax department. The charter lists out the fundamental rights of taxpayers and basic standards of services that they should expect.  

A tax expert pointed out that there was an expectation that the taxpayers wil get compensated for delay in issuance of refunds or other services the way taxpayers pay late fees and penalties.

Aravind Srivatsan, Partner, Nangia Andersen LLP, “While the finer aspects of the incentives available for an honest taxpayer is to be released yet, any steps taken by the government will be felt by an honest taxpayer only when the taxpayer is not burdened with arbitrary assessment of tax return and harassment of tax collection against arbitrary tax demands.

He added that an honest taxpayer in reality willfeel and develop trust in the government only when the taxpayer is treated with fairness. It can be accomplished by through instant issuance of refunds upon filing of tax returns and electronic assessments duly backed by standardisation of tax positions and introduction of faster resolution of tax disputes through negotiated settlement process, said Srivatsan.

Mukesh Bhutani, managing partner, BMR Legal said that in his view the charter’s emphasis on respect for taxpayers’ privacy and maintaining confidentiality stood out, as they were absent in the Citizens’ charter 2014. “Absence of such categorical statements, in the 2014 Citizens' Charter of the CBDT had led to difficulties for businesses in dealing with speculative news on tax-affairs of individuals and corporates coming in the public realm and impacting their right of privacy,” he said.

Bhutani added that it was important to publicise the charter and create an awareness campaign leading to a new era, “which so far has been known more for its wrongs than the right things it has pursued in the past decade of tax reforms.”

He further added that it was equally important to that a strong mechanism of accountability is instilled in the field officers to act responsibly keeping in mind the spirit of the charter. “The Taxpayers Charter implementation will be closely watched given the importance the law makers have accorded at the highest level,” said Bhutani.

Archit Gupta, Founder and CEO – ClearTax  said that while the Taxpayers' Charter is based on easing compliance for all taxpayers, the policy announcements must also reflect in the functioning of tax administration. “The tax officers need to be trained and focus needs to shift from merely raising tax orders to supporting taxpayers and truly streamlining assessments,” he added