The discretionary powers currently enjoyed by tax officials are a major cause of corruption, claimed the Metropolitan Chamber of Commerce and Industry in a recent report, urging the government to scrap such fiscal distortions in the ensuing budget. ‘The discretionary powers were withdrawn briefly for two years but the same have been restored for reasons not known to us,’ the report reads. ‘It will be relevant to mention that tax collection did not decline when the discretionary powers were withdrawn,’ it points out.

The existing tax regulations authorise taxmen, particularly the deputy commissioners of taxes, to scrap tax exemption granted to any business citing some reasons by virtue of the discretionary powers delegated to them. Besides, the tax officials are authorised to compute the tax payers incomes in a way which they deem right, often resulting in disputes.

Taxmen currently enjoy the authority to order fresh assessment of any tax file, forcing taxpayers to go for underhand settlement, the businessmen alleged. In the cases of deducting tax at source, approving tax credit and estimation of profit on sale of fixed assets, tax officials are vested with huge discretionary powers, which force the taxpayers to pay bribes to get the things done, it is widely alleged.