Shome calls for a total shake-up in tax system

Tags: News

Says use of technology, data mining and better customer service can do wonders

More than changing tax laws, complete structural reforms in tax administration in partnership with organised private sector is need of the hour to ensure medium to long-term growth in tax revenues, felt Parthasarathi Shome, chairman of prime minister’s committee on general anti-avoidance rules (GAAR).

Shome, who was instrumental in formulation of direct tax code (DTC), and goods and service tax (GST), has identified making large taxpayers units (LTUs) compulsory, besides enhanced computerisations including data mining and better customer service as three pillars to improve the overall tax structure in the country.

“We must identify large tax payers units on the lines of international practices that would allow tax officials to look into their accounts, thus significantly lowering down tax litigation cases in the country,” he said while speaking at a meeting held by PHD Chamber of Commerce and Industry, on direct taxes.

These LTUs could be across sectors like oil and gas, banking, insurance, telecom and even educational universities that contribute in a big way to direct taxes collection in the country.

Shome said the government should not look for short-term gains, as a consequence of which basic structural reforms like GST and DTC have taken a back seat. “Instead, we should look for medium to long-term plan, as it would help us to get back to higher growth rates of 10-20 per cent in tax collection achieved during 2004-08,” he said.

Gross direct tax collection in the country during April-October went up by 6.59 per cent at Rs 3.02 lakh crore vis-à-vis Rs 2.84 lakh crore in the corresponding period a year ago, while the net direct tax collection went up by 14.63 per cent to Rs 2.50 lakh crore as against Rs 2.18 lakh crore in the same period last year owing to lower refunds so far this year.

Corporate tax collection that constitutes maximum to the overall direct taxes kitty grew by 2.01 per cent during the April-October period, at Rs 1.93 lakh crore vis-à-vis Rs 1.89 lakh crore posted during the same period in the last fiscal.

The personal income tax collection, however, grew by 15.78 per cent to Rs 1.08 lakh crore as against Rs 93,769 crore in first seven month of the last fiscal, while the wealth tax collection registered a growth of 25.84 per cent at Rs 526 crore as compared to Rs 418 crore in same period last year.

Securities transaction tax (STT) collection, however, declined by 15.42 per cent at Rs 2,502 crore in the April-October period, from Rs 2,958 crore in the corresponding period last year.

Government has set a target of 15 per cent increase in direct tax collection this year at Rs 5,70,257 crore as compared to Rs 4,98,000 core collected last year. Even Rs 4.98 lakh crore achieved last year was way below the revised target of Rs 5,13,000 crore.

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