Lok Sabha Question No. 1628 (UNSTARRED), answered on 2020-03-02
Subject: Tax Payer’s Charter
Ministry: FINANCE
Asked by: Sushil Kumar Singh

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 1628

TO BE ANSWERED ON MONDAY 2 ND  MARCH, 2020 PHALGUNA 12, 1941 (SAKA)

## TAX PAYER'S CHARTER

## 1628. SHRI SUSHIL KUMAR SINGH:

Will the Minister of FINANCE be pleased to state:

- (a) whether  the  Ministry  is  introducing  a  new  tax  payer's  charter  to  ensure  that  the  small businesses do not face harassment at the hands of the tax officials;
- (b) if so, the time by which the Ministry is planning to introduce this charter and the details of perceived benefits of such a step;
- (c) whether the tax officials are right when they demand tax from startups who have already received a certificate for non-applicability of the provisions of clause (viib) of sub-section 2 of Section 56 of the Income-Tax Act,1961 from the Ministry  and if so, the details thereof;
- (d) whether some tax officials in Bangalore, have imposed a penalty on women headed startup despite the fact that they possessed the above-mentioned certificate; and
- (e) if so, the details of steps being taken by the Ministry for ensuring that the entrepreneurs are not harassed and especially women entrepreneurs?

## ANSWER

## THE MINISTER OF STATE IN MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a) & (b) With the objective of enhancing the efficiency of the delivery system of the Income Tax Department, Hon'ble Finance Minister in her Budget Speech-2020 proposed to amend the provisions of the Income Tax Act,1961(the Act) to mandate the Central Board of Direct Taxes (the Board) to adopt a Taxpayers' Charter. Pursuant to this Budget announcement, vide Finance Bill-2020,  a  new  section  119A  has  been  proposed  to  be  inserted  in  the  Act.  As  per  the prescribed new section the Board has been mandated to adopt and declare a Taxpayer's Charter and issue such orders, instructions, directions or guidelines to other income-tax authorities as it may deem fit for the administration of Charter.

(c) No, it is not right to demand tax from startups who have already received a certificate for non-applicability of the provisions of clause (viib) of sub-section 2 of Section 56 of the Incometax Act, 1961, from the Ministry.

(d) Information has been collected from the field that the assessing officer had asked for certain documents/clarifications vide notice u/s 142(1) dated 29.01.2019 on the basis of return filed by a company, which was selected for scrutiny. The taxpayer did not reply to these notices even after lapse of more than 9 months. It also did not respond to the penalty notice dated 25.11.2019 for such non-compliance to notice u/s 142(1). Hence, a penalty of Rs. 10,000/- was levied u/s 272A  (1)  (d)  for  non-compliance  of  statutory  notices  and  not  providing  the  requisite information. The penalty imposed in this regard is with respect to non-compliance to statutory notices only. As reported by field, the taxpayer had not intimated or submitted any document stating  that  it  is  a  Startup  entity  either  during  the  assessment  proceedings  or  the  penalty proceedings. Moreover, the addition was made on the facts of the case, treating the tax payer as a normal scrutiny case. However, as soon as it was known that it was a Startup company, the field authorities have been directed to take necessary remedial measures.

(e) The IT department has issued extensive guidelines with respect to,

(i) assessment of eligible Startups,

(ii) steps to be taken in cases where addition have been made in the past in appeal proceedings and further subsequent appeals and

(iii) stay of recovery of any such demand, if created.

All these guidelines and directions are applicable to all the eligible Startups. A Startup cell at the highest level of CBDT has also been created which resolves such grievances within 24 hours time. Moreover, after AY 2017-18, the list of such eligible Startup cases are shared with Directorate of Systems, IT Department so that they are not selected  under Computer Assisted Scrutiny System (CASS) for scrutiny u/s 143(3) of the IT Act, in  future on the ground  of excessive share premium u/s 56(2)(viib) of the IT Act.

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