Asia Economy

India's income tax office dismisses calls for coronavirus tax on super rich, says it doesn't reflect 'official views'

Key Points
  • India's income tax department on Sunday dismissed a paper that recommended taxing the super rich as part of the government's efforts to deal with the economic crisis brought about by the coronavirus pandemic. 
  • A group of around 50 Indian Revenue Service officers recommended raising the highest tax rate to 40% for people earning above 10 million rupees ($131,083.10) in a year.
  • Alternatively, they suggested, India could also apply a wealth tax for those with a net worth of 50 million rupees or more. 
  • The paper was sent to the Central Board of Direct Taxes, a statutory board under the Department of Revenue at the Indian finance ministry, and it was shared on Twitter. 
People strand the White Round mark area and bay the Vegetables during the first day of a 21-day government-imposed nationwide lockdown as a preventive measure against the COVID-19 coronavirus in Kolkata on March 25, 2020.
Debajyoti Chakraborty | NurPhoto | Getty Images

India's income tax department on Sunday dismissed a paper that recommended taxing the super rich as part of government efforts to stave off the economic crisis brought on by the coronavirus pandemic. 

India has extended its lockdown until May 3, and that's halted most economic activities in the country. The government's direct and indirect tax revenues are expected to decline as a result of those restrictions. 

A group of around 50 officers from the Indian Revenue Service, which plays a role in the collection of direct taxes for the income tax department, recommended raising the highest tax rate to 40% for people earning above 10 million Indian rupees (about $131,090) in a year. They also called for a wealth tax for those with a net worth of 50 million rupees or more. 

The paper was sent to the Central Board of Direct Taxes, a statutory board under the Department of Revenue at the Indian finance ministry. It was also shared on Twitter by the Indian Revenue Service (IRS) Association. 

"In times like these, the so called 'super rich' have a higher obligation towards ensuring the larger public good," the officers said in the paper. 

"Most high-income earners still have the luxury of working from home, and the wealthy can fall back upon their wealth to cope with the temporary shock," they added.

The Income Tax Department swiftly dismissed the proposal.

The department said the statutory board never asked the IRS Association or those officers to prepare such a report, and said the proposals in the paper did not "reflect the official views of CBDT/Ministry of Finance in any manner."

Officers going public with the report was a violation of conduct rules and inquiries were being made, it said. 

The officers also recommended a surcharge on foreign companies that have a "permanent establishment in India." 

Revenue generated by the proposals should be used for specific projects identified by the government that is likely to have "a decisive impact on reviving the economy," the report added. 

They also suggested a one-time Covid-19 relief tax of 4% for people earning more than 1 million rupees annually, along with other measures.

Latest data from the health ministry showed there were at least 27,892 confirmed cases of infection and 872 people have died.