Taxpayer grievance redressal system needs more teeth

New Delhi: The government should reinvigorate the taxpayer grievance redressal system by giving it more teeth and making it independent of the tax department to help build trust in tax administration, the Economic Survey said on Friday.

Globally countries - like US, Canada, UK - with an independent tax ombudsman have performed better on the tax administration front through better trust between the taxpayers and tax authorities, and have exhibited a higher average Tax to GDP ratio and lower time taken to file them. "International experience suggests an ombudsman system is necessary for ensuring protection of taxpayer's rights.

However, the institution, in India's past experience, was not effective and was abolished. A possible reason may have been inadequate independence from the tax department. "Therefore, there is a need to reinvigorate the systems of grievance redressal in India, and incorporate a more holistic view of enhancing customer experience and protecting taxpayer rights," the Economic Survey 2020-21 said. It further said to avoid conflict of interest, ensure fair dealings and build the trust between taxpayers and tax authority, it is imperative that the redressal organisation has adequate teeth and is independent of the tax department.

"Such an institution would thereby make the 'Honoring the Honest' platform more successful by ensuring accountability and trust in the tax administration system," Chief Economic Adviser Krishnamurthy Subramanian said in the survey. The income tax department has already started faceless scrutiny assessment and faceless appeals system to cut down on face-to-face interaction between taxpayer and tax authorities.