JUNE 22, 2016

By TIOL Edit Team

PRIME Minister Narendra Modi's 'RAPID' charter for tax administrators–R for Revenue, A for Accountability, P for Probity, I for Information and D for Digitization needs to be welcomed wholeheartedly. The Acronym RAPID, can herald paradigm shift in tax governance, if embraced as karamsthan dharam (workplace religion) by one and all in the Department of Revenue (DOR) and its appendages.

If it is not implemented seamlessly across the tax administration, RAPID would turn out to be just another acronym/alliteration that Mr. Modi deftly spins at events.

Apart from five drivers that constitute RAPID, its essence lies in the literal meaning of RAPID. Yes, DOR and its appendages need to accelerate their work to deliver more revenue for inclusive growth.

Tax administration ought to utilize information technology and business intelligence ethically while imparting realistic transparency to its work excluding ongoing probes. Put simply, they have to make themselves accountable to all stakeholders including tax payers.

That PM is goading DOR to act on time becomes clear from his advice to officials to "turn the Gyan Sangam into a Karma Sangam, so that the ideas generated from this conference lead to concrete action on the ground."

Before discussing Karam Sangam's action points and our add-on wish list, we need to commend Finance Minister Arun Jaitley for converging separate annual conferences of top officials of Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) into a unified meeting - Annual Conference of Tax Administrators 2016/ Rajasva Gyan Sangam . This convergence initiative appears small. It significance lies in the fact it was not taken all these years.

We hope this initiative would lead to more steps towards enhanced cooperation between CBDT and CBEC. This should eventually lead to unification of the two boards as recommended by Tax Administration Reforms Commission (TARC) and mooted earlier too.

It is, however, disappointing to note that the official release does not indicate whether the two-day conference recommended any specific initiative to synergize the operations of CBDT and CBEC.

The Government should in fact mandate automatic but secretive information exchange not only between these Boards but also all investigating agencies. The inordinately delayed exchange of information between CBI and Enforcement Directorate in VVIP Chopper scam under UPA regime should underscore the urgency on this count.

The release has mentioned major "take-aways" of the conference separately for CBDT and CBEC. One recommendation has rightly called for identification of 20 topmost litigated issues on indirect taxes side and examine whether they can be minimized/resolved through policy interventions. One can blindly pinpoint litigation over interpretation of duty waivers and concessions as one of the topmost litigated issues.

This calls for not only reduction of incentives to the bare minimum but also elaborate notification of terms and conditions governing incentives. It is here pertinent to commend the conference's call for issue a master circular after reviewing all existing excise circulars and rescind redundant ones. CBEC should in fact issue not only master circulars but also master tariff and non-tariff notifications for excise, customs and service tax. A typical master circular/notification should explain the background and significance of the latest decision and annex to the previous ones cited in it. The master circular/notification approach should also be pursued by CBDT to simplify further the ease of paying taxes.

As symbolism and perception is as important as core operations in the age of social media, DOR will be well advised to put in RAPID mode the processing of tax and money laundering probes in the cricketing world. The cases pertain to BCCI and IPL team owners.

DOR should also lend credence to the repeatedly reiterated idea of tax payers as valued customers of tax administration by making public the minutes and agenda notes of the conference. This will help all stakeholders understand CBDT and CBEC better and give feedback on the basis of right information and knowledge made accessible at the right time.

DOR's penchant to hold back information or delay disclosures results in information deficit among other stakeholders and reinforces the distrust between tax administration and tax-payers. Unwarranted secrecy also fuels speculative and incorrect stories and analysis in the media.

This brings us to the need for DOR to make public TAR's recommendations that have either been rejected or are still under consideration or have been accepted partly.

DOR should follow RAPID by allowing free flow of information on ideas that can help improve tax system. DOR has so far disclosed only its decision TARC's recommendations that are already under implementation.

Another instance of DOR not being in tune with PM's RAPID charter is two-year delay in making public three black money studies conducted by National Institute of Public Finance and Policy (NIPFP), National Council of Applied Economic Research (NCAER) and National Institute of Financial Management (NIFM).

Indeed, it is distressing to find that the conclusions and recommendations of these studies, TARC and several other committees did not figure at the conference, if one goes by press release.

PM has given an opportunity as well as challenge to DOR to follow RAPID mantra. We would eagerly wait for release of 1st year report card on RAPID's execution at the next Rajasva Gyan Sangam.