To motivate bureaucrats to work for higher tax collection
You have to spend in order to earn, goes the saying.
Finance Minister P. Chidambaram is clearly aware of this and has managed to convince his colleagues in the Government to spend an additional Rs 450 crore in pay and perks for officers belonging to the Indian Revenue Service (IRS), who form the backbone of the tax collection machinery.
In one of the most sweeping revisions in the complex system of pay and posts which dictates the pecking order in India’s bureaucratic machinery, IRS officials will now be able to reach the highest rank in the administrative system — that of Special Secretary to the government — after 37 years of service.
However, this is still a few years behind the number of years an officer belonging to the ‘crème de la crème’ of the civil services — the Indian Administrative Service (IAS) — would take, even though both IRS and IAS officials are chosen on the basis of the same selection examination.
So far, the top level of the civil service was the zealously guarded preserve of the ‘senior services’ — the IAS, and its relatively minuscule, but prestigious counterpart, the Indian Foreign Service.
Barring appointments as Chairman or Members of the Central Board of Direct Taxes (CBDT), which are Secretary-rank posts, IRS officers could at best hope to reach the Joint Secretary level. All this is set to change.
The Government has also cleared the creation of as many as 20,751 additional posts in the Revenue Department.
The argument for creating the new posts, as well as raising the rank grades, was simple. Unlike other arms of the administration, every rupee spent on the Revenue Department will generate many times that much in additional tax collections. More than 500 times, in this case, since the Cabinet note projected that the additional Rs 450 crore a year outgo towards the new posts (as well as the higher pay for those making it beyond the Joint Secretary grade) would result in more than Rs 25,000 crore of additional tax collections yearly.
“Now, demoralisation of the cadre will be arrested and people will work for more revenue collection,” Sidhartha Pradhan, President of the Indian Revenue Service Association, an all-India body of tax officials, said.
There are reasons for this ‘demoralisation.’ An IAS officer reaches the Junior Administrative Grade after seven years, while for an IRS officer, this takes 10 years. Similarly, for the Higher Administrative Grade, an IAS officer takes 25 years, while an IRS officer spends 33 years. Pradhan said that after IAS, IRS officers were “most important,” as they bring revenue. “They should not be treated as second rate citizens,” he said.
Income-tax collections grew to Rs 5.59 lakh crore in 2012-13, from Rs 1.04 lakh crore in 2003-04, a compounded annual growth rate of 30 per cent. But the strength of the Income Tax Department came down to nearly 57,000 from 62,000 during the same period. Now, the trend is likely to reverse.
With the implementation of the restructuring exercise, 26 Chief Commissioners of Income Tax and Directors-General of Income Tax will be upgraded to apex level, with the posts known as Principal Chief Commissioner and Principal Director-General. Ninety-one Chief Commissioners of Income Tax will remain as Chief Commissioners or Directors-General, but will be placed in the Higher Administrative Grade-Plus. Both these grades were earlier not available for IRS officers.
Altogether, an additional 1,349 Indian Revenue Service officers will join the service over five years with 270 posts a year being filled in the next four years and 269 in the fifth. Half of these will be through direct and fresh recruitment, and the rest through promotion.
With the taxmen getting their pound of flesh, there is a fear that the Indian Police Service (IPS) — which has so far been second in the pecking order — will raise its voice, sparking a new ‘seniority’ race.