Tax Officials Find Modi’s Targets Too Taxing, Unrealistic: Reuters

A report by Reuters states that over a dozen tax officials interviewed by the news agency said that they are stuck between a push to meet unrealistic collection targets set by the Modi government, which influence their appraisals and transfers, and the fear of being accused of over-zealousness if they crack down on evasion.

Bhaskar Bhattacharya, vice president of the Income Tax Gazetted Officers’ Association, stated that 22 top-level tax department officers have opted for voluntary retirement so far this year and around 34 did so in 2018.

Though Bhattacharya was unable to provide comparative data, he added that bureaucrats ditching such prestigious and powerful jobs was rare.

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Modi Govt’s Unrealistic Tax Target?

According to an official in the finance ministry, direct tax collections have grown by only 3 percent from April to September 2019.

The collections would have to grow by 42 percent from October 2019 to March 2020 to meet the Modi government’s target for the financial year, estimated Aditi Nayar, principal economist at ICRA, the Indian unit of Moody’s.

‘Unorthodox Tactics Being Used to Cope With Mounting Pressure’ "“The pressure is getting greater. To achieve our targets we are under pressure, so we do some things that we don’t want to do.”" - A tax official in north India, speaking to Reuters

Unorthodox tactics being used by the department include asking companies for advance tax payments, as well as delaying refunds, other tax officials said.

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Modi’s Mixed Signals?

The Modi government wants to collect 17% more in direct taxes this year to increase revenues amid the ongoing economic slowdown. But simultaneously, the government has also cut the corporate tax rate in September from 30% to 22%, foregoing almost 1.5 trillion rupees in revenue.

The tax target though has been maintained, even as Modi warns officers not to harass businesses in their drive to collect revenue.

“Some black sheep in the tax administration may have misused their powers and harassed taxpayers. We will not tolerate this type of behaviour,” Modi had told Economic Times in August.

Finance Minister Nirmala Sitharaman has been issuing a similar message while touring tax offices, saying that the revenue target is realistic and therefore collectors “need not overstretch.”

But Bhaskar Bhattacharya from the IT officers’ association says that without a clear definition of over-reach, confused officers are hesitant about how to handle truant taxpayers.

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