The government is looking to put in place an incentive programme to reward and recognise honest taxpayers to encourage a culture of compliance.
The proposal will be vetted by the Finance Ministry and sent for final approval to the Prime Ministers Office (PMO) before it is cleared by the Union cabinet. A cabinet note to enhance the output of the Central Processing Centre (CPC) of the department in Bengaluru has already been prepared and sent. The capacity and automation of the CPC, the repository of tax payer's data and their IT Returns (ITRs), is proposed to be enhanced so that refunds can be issued real-time and ITRs of small taxpayers (with single source of income) can be processed within hours and not days, as prevalent at present, they said.
As part of the larger plan, they said, it is proposed that honest taxpayers are empowered to get "priority service" while using public services at airports, railways stations and at tolls on highways. Prime Minister Narendra Modi, during a conference with senior tax officers last year, had urged the department to enhance taxpayer services and ensure that honest taxpayer are given due importance.
A committee has been set up under Central Board of Direct Taxes (CBDT) to draw up the scheme. The committee will look at reward programmes instituted in various countries and draw from the best practices, said the official. The selection of people may not be based on the amount of tax paid but on criteria such as regularity in filing of returns, not being penalised or prosecuted and not having been subjected to searches or surveys. The income tax department earlier had a scheme called Samman that rewarded taxpayers, but it was discontinued after 2004.