Taxpayers' charter silent on assessee's legal right, implementation

The taxpayer's charter unveiled by the Prime Minister Narendra Modi today is not the first time the government has come out with such a charter. In 2010, the government had come out with a citizen's charter, a document listing the dos and don'ts for the tax department as well as the taxpayers. The 2010 citizen charter was revamped in 2014 as those grand announcements remained in the documents, say experts.

Is the new charter different? Although the intention appears noble, it lacks legislative backing. The efficacy of the charter will only depend on its implementation.

The taxpayers' charter not only enlist the tax department's commitment towards taxpayers but also the department's expectations from the taxpayers. While how effective the charter this time around is can be found in details, it will primarily depend on its legal status. This is where it lacks clarity.

Sudhir Kapadia, national leader tax, EY India believes the charter will be part of the Income Tax Act as it was announced in the budget, but he was not fully aware of the legal status of the charter.

Amit Jindal, founding partner, Felix Advisory, however, says such charters are never part of the Act, and the recent charter may not be any different.

However, Jiger Saiya, partner & leader, Tax and Regulatory Services, BDO India, believes it could be a part of the Act. "In the budget the finance minister had announced that such a charter will be introduced and in the finance bill there was a specific amendment in the Act - inserting a new section 119A -- which makes a reference to the taxpayer's charter which the tax department would agree and abide by," he says.

He adds that there has been a citizen's charter earlier and similar power was given to the board to release any kind of notification, but this could be the first time for the charter to be under the Income Tax Act.

Some experts also believe that some of the points in the charter are categorical and very specific and therefore, lend credence to this charter than the earlier ones.

According to Mukesh Butani, founder and managing partner, BMR Legal, what stands out in the charter is its emphasis on respect for taxpayers' privacy and maintaining confidentiality. Absence of such categorical statements in the 2014 Citizen Charter of the CBDT had led businesses to difficulties in dealing with speculative news on tax-affairs of individuals and corporates coming in the public realm and impacting their right of privacy.  

He says with the legislative sanctity to the charter, the detailed guidance is something that the taxpayers shall look forward to.

While the charter makes grand announcements, it is to be seen if the same is implemented with the legislative support to have real impact on the ground.

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