The Hindu Business Line : Direct tax mop-up set to cross 5 pc of GDP this fiscal: Chidambaram

The Union Finance Minister, Mr P. Chidambaram, with the Minister of State for Finance, Mr S.S. Palanimanickam, and the CBDT Chairman, Mr Bejender Singh, at the 21st Annual Conference of Chief Commissioners & Directors General of Income-Tax in the Capital on Wednesday. - Kamal Narang

New Delhi , July 6

THE Finance Minister, Mr P. Chidambaram, on Wednesday advised the Income-Tax Department to gear up to face the new challenges arising on account of the growing importance of direct taxes as the biggest contributor to the Exchequer.

Inaugurating the 21st Annual Conference of Chief Commissioners and Directors-General of Income-Tax (DGIT), Mr Chidambaram drew the attention of the delegates to a new milestone that would be achieved on the direct taxes front in 2005-06.

He said that direct taxes as a proportion of GDP would surpass the 5 per cent mark in 2005-06.

In 2004-05, direct tax collections were in excess of Rs 1,31,000 crore. This translated into a direct tax-GDP ratio of over 4 per cent for the first time in over 40 years.

Mr Chidambaram also highlighted that direct tax revenue in 2005-06, for the first time, is slated to exceed the revenue from Customs and excise duty put together.

The Customs and excise collections budget for 2005-06 is Rs 1,74,715 crore (Customs-Rs 53,182 crore and excise-Rs 1,21,533 crore).

For 2005-06, the Government has budgeted direct tax revenues at Rs 1,76,812 crore.

This target represents a 35 per cent increase over the actual collections of Rs 1,31,100 achieved in 2004-05.

"Like any other developed country, direct taxes in India will play a larger role. The Income-Tax Department must develop a vision for the coming years and employ new technology to equip itself as the biggest tax collecting instrument of the Government," Mr Chidambaram told newspersons on the sidelines of the conference.

The Finance Minister also advised the Department to improve its expertise in international laws and impart further training to its personnel in the area of international taxation.

"There is so much of international trade being undertaken by India. International taxation has become an important area. The players are far more sophisticated. Our tax department personnel must upgrade their skills."

On whether he received "new ideas" from the Chief Commissioners for maximising tax revenues and achieving the formidable target for 2005-06, Mr Chidambaram said that there were 2-3 good ideas that could be pursued but refused to elaborate.

Sources said that one of the ideas that emanated at the conference related to steps that may be taken to reduce the interaction between the taxpayer and the Department.

"The idea is to have some form of single-point interface between the taxpayer and the Department. After that, the taxpayer should not be concerned with who and where his returns are processed or assessed. This way there could be little influence by the taxpayer."

The conference also devoted some time on the issue of large taxpayer units, which is likely to act as a single-window for both direct and indirect taxes.

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