Industry & Economy
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Taxation
Cost of collecting taxes to double
Sudhanshu Ranade
Chennai
,
March 2
ACCORDING to the Revised Estimate for 2004-05, current expenditure on the Department of Revenue was about Rs 400 crore above the actual figure for 2003-04.
As against this, a hike of more than Rs 5,200 crore has been proposed in the 2005-06 Budget as compared to the Revised Estimate for 2004-05.
Total current expenditures budgeted for 2005-06 are Rs 7,693 crore.
The cost of tax collection as a proportion of total tax collected/expected to be collected will, therefore, more than double from below one per cent in the Revised Estimate to more than 2.2 per cent as per the Budget Estimate.
In addition, the capital expenditure of the Department of Revenue went from Rs 60 crore in 2003-04 (actuals) to Rs 111 crore in 2004-05 (Revised Estimates) and is slated to rise to Rs 276 crore in the Budget for 2005-06.
A break up for the total expenses of the Department of Revenue, in particular as between the cost of collecting corporate tax on the one hand, and the cost of collecting personal income tax on the other is not available. Some decades ago, it was estimated that the cost of collection of personal income tax, that is excluding the tax on corporate income, was as high as 33 per cent of gross collections.
This cost would no doubt have come down considerably with the computerisation of tax records and the extension of Tax Deducted at Source.
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