The Hindu Business Line : Chidambaram tells I-T Dept to target big spenders to widen tax base

THE Finance Minister, Mr P. Chidambaram, has directed all Chief Commissioners of Income Tax (CCsIT) to target high net worth individuals, high spenders on lifestyle items, luxury car purchasers etc., as potential taxpayers to widen the tax base.

The CCsIT, on their part, are learnt to have cited a severe staff shortage, particularly in Mumbai and Delhi, in the cadre of IT Inspectors.

According to Income-Tax Department sources, the age profile of staff working in field formations has increased owing to non-recruitment for a substantial period of time. It is learnt that the recruitment policy was now before the Cabinet for review.

Informed sources told Business Line that Mr Chidambaram, while chairing a recent meeting of the cadre-controlling Chief Commissioners of Income Tax and select CCsIT/Director Generals of Income Tax and members of the Central Board of Direct Taxes (CBDT), had observed that the department was not doing enough to target the high net worth individuals and high spenders.

Sources said the Minister has directed that each CCIT must study the effective rate of taxation of top 100 private sector companies in his charge to analyse the reasons for "divergence between the effective and statutory tax rates." Effective rate is arrived at after factoring in all deductions and allowances.

According to the Finance Minister, the effective tax rate of the private sector companies was between 18 per cent and 19 per cent, which was far less than the statutory rate of 35 per cent. Suggesting that the quarterly results of the companies in each Chief Commissioner's charge must be analysed, he is learnt to have advised that CCsIT must devote at least one day in a week for devising a collection strategy using latest analytical tools.

Mr Chidambaram's response on the projected staff shortage, according to sources, was that redeployment of officers should be addressed by the CBDT, after taking into account the revenue potential of each charge. It is learnt that in the context of the revenue targets for the current fiscal, and the shortfall in direct taxes last fiscal, he wants the CCsIT to ensure that the effective tax rate increases by at least three per cent over that in 2004-05.

Suggesting that taxpayers must be treated as clients, the Minister has urged the department to adopt a more analytical and professional approach towards this section, similar to that with fund managers, rating agencies etc. He has directed the department to study the taxpayers' behaviour, particularly as to why there has been an increase or decrease in tax payment vis-à-vis the industry average.

Each CCIT has also been advised to set up within six months at least one `genuine' Help Centre outside the premises of the Department, ideally within the premises of trade associations, industry bodies, NGOs etc., to help assessees on tax matters.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Contract jobs will become more acceptable'

India Inc promises Rs 30,000 crore investment in M.P.

Eight-fold initiative to boost ties with Japan

Diabetes gene research enters `exciting stage'

CII signs pact with TN agency

Interactive gas refill booking

AP sets up panel to monitor energy conservation

Pawar inaugurates energy park in Pune

Vegetables, meat, fish to attract 4 per cent VAT in Maharashtra

Panel rejects plea for 4% VAT on all types of footwear

Unitech may buy 90-acre land from Gordon Woodroffe

Dindigul handloom sales

Kerala Kudumbasree milestone

May Day, not 'mayday'

National Tech Day fete in Thiruvananthapuram

Chidambaram tells I-T Dept to target big spenders to widen tax base