TARCs recommendation for People Function of Tax Department

Another area that does not compare internationally is that of HRD or the People function. Staff are not empowered to take independent or correct decisions for fear of retribution and vigilance,the exclusive objective being to “protect the revenue”. They are made to collect revenue irrespective of the condition of the macro-economy that should indicate how much tax may be correctly collected. They therefore tend to make decisions well knowing that a tax demand or dispute will not pass the test of judicial processes. At the same time they are subjected to
promotion, training, transfer, and leave policy that are fundamentally non-reflective of global practice. At the same time, senior management is subservient to the top Revenue official who,over the years, is imported from another Union Service that has no direct link to revenue or taxation. The overall outcome is a subdued tax administration that is far from dynamic. Indeed, over recent years it has acquired the notoriety of corruption. Empowering the staff, or People Function, comprises Chapter IV and TARC makes several significant recommendations towards empowerment.

The TARC recommends that:
 Both the departments should shift all their key operations to the digital platform so that performance can be reliably measured.

 A system of limited departmental competitive examinations should be introduced by earmarking 33 per cent of the vacancies in the promotions quota in Group B as well as Group A, so that relatively more meritorious and younger officers in the feeder grades can get a fast track in promotions.

 Recruitment needs to be made on the basis of carefully drawn recruitment plans that balance the short and long term needs and career aspirations of officers.

 Provision should be made for lateral entry of experts in key roles and specialized areas. While they may be on contract for 5 years, subject to their suitability and willingness they should be able to integrate with the organisation at the end of the contract period.

 The CBEC needs to develop a human resource management system, as has been done by the CBDT; collaboration and knowledge exchange between the two DGs (HRD) will
enable CBEC to get such a system going in shorter time.

 A comprehensive performance management system needs to be set up for both tax
administrations by revisiting and reconstructing the RFD.

 Key performance indicators, detailing the performance areas, objectives, key initiatives, performance indicators and performance targets, should be arrived at using the Balanced Scorecard methodology.

 The performance appraisal process needs to be made more wholesome and reliable by making it more open and by introducing a mid-year review.

 The tax administrations should extend the performance appraisal system to elements of 360° appraisal to include feedback from subordinates.

 The outcome of discussions during the performance appraisal process should result in the superior taking responsibility for juniors by putting in place an improvement plan to overcome their weaknesses.

 Performance needs to be recognized through non-pecuniary measures such as giving important assignments in chosen areas of work or specialization.

 To facilitate renewal of talent and professional growth, officers should be allowed to move outside the departments for defined periods of time.

 The career of IRS officers should be divided into three phases:
o The first 9-10 years should be spent rotating through different functional areas to gain familiarity
o The next 8-9 years should be in two or more specialist areas
o Persons showing the ability for top leadership will go into the third phase and constitute the pool from which selection will be made for top positions

 A common assessment centre for the two Boards needs to be set up by the people function to make a thorough, all round assessment of officers at the first transition point.

 In view of a different promotion system being recommended, the UPSC should be
consulted for exempting these promotions in the IRS from their purview like some other services, e.g., the Indian Foreign Service, Indian Railway Services and Indian Audit and Accounts Services are exempted. However, if the UPSC is willing to be associated with the altered promotion scheme, that option should be considered.

 A formal mentorship programme may be set up, with carefully selected mentors.

 The transfer and posting policy should be recast to promote specialization and
accommodation of individuals’ choices in professional growth and should bring about predictability, stability and certainty to placements. Personal difficulties of officers should receive due consideration.

 DGs (HRD) should assist the Boards in transfers and postings and they should be member secretaries of the placement committees. The administration section should have no role to play.
 Learning and development should occupy a central place in people advancement and all officers must undergo a minimum 10 days of training every year.

 NADT and NACEN infrastructure should be substantially upgraded and the academies need to keep themselves updated in terms of the contemporariness of course content, pedagogy and use of ICT in training and they should be treated on par with LBSNAA.
Their budgets should match the stipulation of the National Training Policy, i.e., 2.5 per cent of the salary budget of the departments should be earmarked for training and should be treated as plan expenditure.

 More emphasis in training needs to be given on customer focus and value education.

 A code of ethics needs to be developed, congruent with the values in the vision and mission statement.

 There should be more proactive approach to preventive vigilance.

 The provisions of Rule 56(j) of the Fundamental Rules should be effectively utilized for weeding out officers who are inefficient or of doubtful integrity.
The criterion for review should be changed to completion of 20 years of service.

 CVC should have a Member who has been an officer of either of the IRSs and there should at least one Joint Secretary/Additional Secretary level officer posted in the secretariat of CVC.

 No cognizance should be taken of anonymous complaint as laid down in the existing DoPT instruction.

TARCs recommendation for Customer Focus

Customer focus
 
A taxpayer is the entity that approaches the tax administration and thus comprises the latter's customer. Yet the prevailing treatment of the taxpayer by the tax administration requires much to be improved in reflection of global practice. Customer Focus reform therefore is the first need. It comprises Chapter II and the first set of recommendations
 
The TARC recommends that:
 There should be a dedicated organisation for delivery of taxpayer services with customer focus for each of the Boards. There should be an exclusive Member in each Board for the taxpayer services. The taxpayer services vertical under each Board would be headed by an officer of the rank of Principal Chief Commissioner, who would be responsible for delivery of taxpayer services. This implies dedicated resources and personnel for this vertical.

 Taxpayer service delivery will be located under one umbrella for large taxpayers, i.e., the CBDT and CBEC will jointly function for large taxpayers through Principal DG (LBS).
For other taxpayers, i.e., medium and small, the operations of the CBDT and CBEC will continue in separate chains.

 Officers and staff at all levels of tax administration should be trained for customer orientation. Further for people posted in this vertical, the training in customer focus need to be more specialized and intensive. This training should be appropriate to the areas in which such officers are deployed such as customer relationship, measurement of customer satisfaction, taxpayer education, etc.

 In line with the international practice of spending 10-15 per cent of the administration’s budget, a minimum of 10 per cent of the tax administration’s budget must be spent on taxpayer services. At least 10 per cent of the budget for tax administration should be allocated and spent for ICT-based taxpayer services.

 Sufficient funds must be allocated to conduct customer research including, in particular, on customer surveys.

 In redressing taxpayer grievances, the decision of the Ombudsman should be binding on tax officers. To bring independence and effectiveness to the office of the Ombudsman, nongovernment professionals should also be inducted in the post.

 Pre-filled tax returns should be provided to all individuals. The taxpayer will have the option to accept the tax return as it is or modify it. In either event, the filing process would be completed with the submission of the tax return electronically.

 There is an urgent need to revisit the present citizen’s charter to make it more meaningful and customer focused. The citizen’s charter should be renamed the taxpayer’s charter to focus on all categories of taxpayers.

 There should be a regular stakeholder consultations on the issues of tax disagreements and tax law changes. The Commission recommends a permanent body for stakeholder engagement. The recent experience of the Forum through which many issues were resolved between stakeholders and the tax departments should become a continuing activity.

 There should be a system for online tracking of dak/grievances/applications for refund etc. It should be made mandatory to receive all dak through a central system generating a unique id. The ASK software implemented by CBDT provides such a mechanism in a limited manner. This needs to be extended to all offices. The functionality to enable the taxpayer to track the status of his application/grievance online should be added to the ASK system.
Similar system for online receipt of application should be enabled on the indirect tax side.

 Continuous benchmarking of the tax administration, particularly in relation to delivery of taxpayer services, with that of other tax administrations should be done to highlight the area of focus.