Industry & Economy
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Taxation
Parliamentary panel for widening tax net
Our Bureau
New Delhi
,
Feb. 25
WHILE expressing concern over the low tax-GDP ratio, a Parliamentary committee has said that there is an urgent need to adopt innovative methods to mobilise tax revenues by widening the tax net with a focus on high-end taxpayers.
In its preliminary report on widening of tax base and evasion of tax, the Standing Committee on Finance (2004-05) has recommended that the Government, while making efforts to widen the tax base, should focus on the high-end taxpayers so as to increase substantially the revenues. It observed that a major portion of the direct tax revenue comes from assessees who form a minor portion of the total number of assessees - the high-end taxpayers. The focus of the Government, however, has been on widening of the tax base by increasing the number of assessees which, in fact, may not result in a big jump in the tax revenue.
One important way of widening the indirect tax base is through the service tax. The committee saw enormous potential for mobilising more revenue from this sector and, therefore, recommended that more services be brought under the net.
Commenting on the Fiscal Responsibility and Budget Management (FRBM) Act, the committee said that though it was satisfied with the intent of the Act, keeping in view the track record of collection of revenue, there were apprehensions that the targets would not be achieved in the near future unless concerted efforts are made to widen the tax base and effective steps taken to prevent evasion.
Taking note of the efforts made by the Government to rationalise the tax structure, the committee felt that in the prevailing economic situation, the present income-tax slab structure needs a review. On the policy front, the committee saw an urgent need to review the plethora of tax exemptions and concessions both under the direct and indirect tax laws.
These exemptions or concessions are being misused, the committee noted.
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