Hyderabad: A new report by Indian Revenue Service (IRS) officials has recommended levying four percent COVID-relief cess on those earning above Rs 4 lakh in a bid to steer India out of the economic crisis.

Entitled 'Force' (Fiscal Options & Response to COVID-19 Epidemic), the 44-page report prepared by 50 IRS officers has created a controversy after the union government clarified that the Central Board of Direct Taxes (CBDT) did not authorize IRS Association or any officer to conduct such exercise.

Interestingly, the report has been rejected by the Income Tax department citing that the officers have not sought permission before going public.

The report has highlighted that the overall Gross Domestic Product (GDP) growth for the financial year 2021 could be as low as 1-2 percent. While the economy is expected to rebound by 2022, the report suggested that “India should focus on temporary job creations in the local areas.”

The report called for increasing income tax rates for the rich and imposing a 4 percent COVID-relief cess on those earning above Rs 4 lakh. It also predicted that the economic impact of COVID-19 will affect differently for different sectors, with airlines and hotel businesses bearing the maximum brunt.

Other suggestions for revenue mobilization include international taxation, by increasing the surcharge applicable to the higher income Foreign Companies having a Branch Office/ Permanent Establishment in India.

The report also underlined the Health Ministry’s contribution towards COVID-19 relief, suggesting that it is less compared to the packages announced by countries like Malaysia.

“Ministry of health and family welfare can use a significant portion of Rs. 67,111 crores budgeted for the whole year in the first quarter of Q1’2020. The COVID stimulus package announced by the Government of India thus far amounts to 0.8% of GDP. Prima facie, this pales in comparison with 11% in the case of the US, 15% in the case of the UK, and 16% in the case of Malaysia,” the report said.

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