NEW DELHI: In a rare kind of prime ministerial interaction, Narendra Modi will be addressing India’s seniormost taxmen on Thursday. His audience at Rajaswa Gyan Sangam —roughly translated as Knowledge Conference on Revenue — will know what most observers of Modi Sarkar may have failed to spot: there’s now, after two-plus years in government, a Modi Tax Doctrine MTD ).Unlike most definitive policy guidelines, MTD wasn’t born out of white papers and special committees. The doctrine took shape out of changes in various tax practices. But it’s a definitive break from the past. A big, positive change. But of course, as in any complex system, challenges remain. ET spoke to many key officials in the finance ministry for this report. Some spoke off the record.MTD can be summed up precisely: make paying taxes easy, that is, simplify procedures, avoid litigation; two, make taxmen friendlier, that is, no coercion, no cooking of revenue books; third, go hell for leather after black money.India’s infamously hidebound tax administration has responded, but taxmen also make the point that they as yet don’t have an information system that can track all high value transactions. And close observers say a good test for the Modi Tax Doctrine will come when rules are framed for hoovering up domestic black money.Black money rules apart, none of these changes in tax practice made headline news. But together they represent a new approach, and taxmen got notice of this soon after Modi assumed office.One senior tax official said: “The new message came, direct and in person, from Modi when he met tax chiefs.” The PM had told them, “Aapse sab darte hain (everyone is scared of you),” this official said. Taxmen understood the message — the brief had changed from just getting revenue to quickly improving public perception.A good example of MTD came in April. Routine, computerised analysis of tax refunds showed a Rs 12,000-crore tax refund. The beneficiary was State Bank of India.Earlier, this wouldn’t have resulted in anything. Now, an inquiry is on, aiming to determine whether SBI was coerced into paying high taxes in March, so that those numbers could shore up revenues and therefore make deficit figures look better in 2015-16.Both Central Board of Direct Taxes (CBDT) and Central Board of Excise & Customs (CBEC) are fully briefed on this aspect of MTD, senior officials said. The tag of ‘tax terrorism’, applied frequently under United Progressive Alliance-2, had to be shed, taxmen were told. “Tax officers have to be accountable. That has been the PM’s key message,” said Revenue Secretary Hasmukh Adhia.“PM’s philosophy is people don’t mind paying taxes but they are worried about procedures. So if you make it easy for them to pay taxes then there’s no need to worry about collection, people on their own will pay,” Adhia said.For large taxpayers, concrete measures to make life easier include: a) clarifying, after years, the difference between business income and capital gains on stock deals; b) the decision to not file appeals below a certain revenue demand level, and withdrawing appeals filed over the past five years; c) a dispute resolution mechanism for waiving penalty and interest on tax claims that kicked in this month; d) advance pricing for domestic companies, allowing them to get a heads-up on tax obligations.Topping all this, said senior taxmen, is the serious promise to reduce corporate tax rate and exemptions. Plus, they said, the ghost of retrospective taxation has been buried, even if the Vodafone case hasn’t reached a solution as yet.Officials say an unprecedented number of circulars has been issued by tax bodies to ensure more clarity and simplification. Even simple things make a big difference — no roving query in a scrutiny, meeting taxpayers at the appointed time. And most important, not having to meet the taxman at all.For customs, for example, multiple forms have been replaced with single online versions and random checks of consignments. Goods movement from warehouse to wharf, and vice versa, is allowed without upfront duty payment.“The government is listening. The nature of interventions that are taking place show the government is listening even at the micro level,” said Rahul Garg, national tax leader, PwC Slapping high demands and then litigating — this is a habit Modi Sarkar is determined to break, senior officials said. At the end of 2014-15, Rs 6.15 lakh crore was locked up in tax disputes, and a big chunk of it was thanks to overzealous taxmen, these officials added.“If some tax officer without rhyme or reason slaps a heavy notice or excessive assessment that finally gets struck down by the Supreme Court, why wouldn’t you ask questions?” Adhia said. “We should evaluate all officers on the basis of success rate in subsequent proceedings rather than on achievement of target.”As many as 56 indirect tax officers have been handed the pink slip. A new appraisal system has been put in place. This judges taxmen on judicial assessment of their claims.And sensible response to court verdicts is also a new element. Not appealing the court on Shell transfer pricing case was a significant demonstration of this policy shift.All the emphasis on an easy regime for taxpayers hasn’t meant an easy regime for tax evaders.“We are going after evaders in a big way based on information received from various sources,” said a senior tax officer.Examples, this officer said, include an investigation by the Directorate of Revenue Intelligence that plugged the misuse of the India-Asean free-trade pact, including by consumer durables majors.Tax on dividends and the so-called Google tax (levied on those earning income from Internet activity in India) are other examples. But the biggest example, of course, is the policy on black money.Close observers of tax policy said rules on getting black money parked in foreign accounts could have been simpler. Tax officials agree that the modest amount declared — Rs 4,164 crore — shows there’s more work to be done, but they say this is a work in progress. And they defend harsh penal provisions such as a 10-year jail term as a deterrent against future ultra-creative tax planning.The “clean-up”, as a senior tax officer put it, of the India-Mauritius tax treaty and plans to tweak other similar treaties are part of the exercise to stop funnelling of black money, and get taxes paid on capital gains. Modi, officers said, had himself taken up the tax treaty when he visited Mauritius.Attention of everyone assessing the effectiveness of black money rules is focussed on regulations for getting out domestic black money. Any cash purchase of a good or service above Rs 2 lakh now faces tax.The government refused to buckle under pressure from the jewellery trade, Bharatiya Janata Party’s large constituency, to roll back excise duty on gold jewellery — the yellow metal being a key component of the black economy.And having given one last opportunity to those holding undisclosed domestic assets, taxmen are ready to move into action. Observers said the disclosure scheme will work best if rules are less complicated.It is not as if, senior bureaucrats say, that a visit to a tax office is an entirely comfortable experience. Ask tax lawyers, accountants and consultants — people dealing with tax officials — and MTD loses some of its sheen. “A change in thinking at the top is very much there at the senior level, but it will take time to percolate down,” said an official.“There have been avoidable instances of very aggressive action by tax authorities including summons to chief executives. This does not go well with the overall policy thrust,” said Sudhir Kapadia, national tax leader, EY.There are more positive words though. “There is visible change in the functioning of tax administration at the ground level. The environment is now more positive, fair and there’s a partnership kind of approach,” said Sanjay Sanghvi , partner, Khaitan & Co.The last-mile problem of execution by tax officials is something MTD has to crack. And as also a very big demand from taxmen: a good information system.A robust infrastructure and an online system for data collection and assimilation is a must, taxmen said. The example they give is making various establishments file annual information reports so that high-value transactions can be tracked.A non-invasive but robust tax system depends critically on good data. That’s the next big job for the Modi Tax Doctrine.