Increasing the tax on the rich and charging an additional 4% ‘Covid Relief Cess’ are some of the proposals a group of some 50 officers of the Indian Revenue Service (IRS) has sent to the government as ways to meet its revenue shortfall and fight covid-19. As the report went viral on Sunday, social media went into a tizzy, forcing IRS Association to later tweet that the proposals did not represent the official views of the Income Tax department.

The 43-page document wants those earning more than a crore in a year to be taxed at 40%, higher than the current 30%. If the proposals on higher tax and cess are accepted, the rich will have to pay more than half of their income -- 59% to be precise -- as tax.

Alternatively, the officers say a wealth tax on those having a net wealth of ₹5 crore or more could be imposed.

“Administratively, the former will be simpler to implement. However, the revenue gain associated with both options should be worked out," the report says. Either of the taxes should be for a limited period, it says.

The 4% Covid Relief Cess is also supposed to be a one-time charge, which the IRS officers say could fetch the exchequer anywhere between ₹15,000 crore and ₹18,000 crore.

“To mitigate the extra hardship on the middle class, the cess may be made applicable only in cases where the taxable income is greater than ₹10 lakhs," the report, titled ‘FORCE 1.0’, says. FORCE 1.0 stands for ‘Fiscal Options & Response to Covid-19 Epidemic’ and is meant to be ‘Recommendations of the Indian Revenue Service on revenue mobilization and economic impetus to fight covid-19’.

In other measures that the IRS officers think could help the government mobilize resources, a new tax saving scheme, ‘Covid Savings Certificates’, is proposed for investments up to ₹2,50,000 with a 5-year lock-in. A new amnesty scheme for collection of undisputed tax demand has also been suggested.

The officers have also suggested increasing the surcharge on foreign companies having a branch office/permanent establishment in India. This surcharge is currently 2% if the income of the foreign company is more than ₹1 crore and 5% if it’s above ₹10 crore.

A tax on MNCs’ Indian arms that make interest and royalty payments to their parent or related parties is also proposed. So is a resurrection of inheritance tax, in force till 1985. A higher ‘Google Tax’ of 7% against 6% now is proposed on non-resident businesses providing advertisement space and services. Similarly, the officers want ecommerce companies to pay an equalization levy of 3%.

The corporates may be allowed to treat the salaries paid to their non-managerial staff during covid crisis as part of their obligation under corporate social responsibility.

The report was first floated on Saturday and kept social media busy all through the weekend. One twitter user, Harsh Gupta, commented, “For a hammer, everything is a nail," while another said this was probably the government’s idea to gauge public reaction to some of the tax proposals that are bound to be unpopular. By this evening, #IRSJokes was among the top trending topics on Twitter .

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