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Our Bureau

New Delhi , Dec. 28

COME April 1, 2006, corporates which pay excise duty of over Rs 5 crore in a year and are assessed to corporation tax in any of the five specified metro cities could opt for the facility of Large Taxpayer Units (LTU) that is to be put in place by the Finance Ministry from that date.

The five specified metro cities where the LTUs would initially be established are Delhi, Mumbai, Chennai, Bangalore and Kolkata. Besides a reduction in compliance and transaction costs, the large taxpayers opting for the LTU scheme can also benefit from the facility of filing their excise return, corporate tax return and service tax return at a common place, that is, the LTU without any fresh registration.

Moreover, the large taxpayer would be assessed to these three taxes - excise, service tax and corporation tax - in the LTU only. The facility for e-filing and e-payment of all taxes would be available round the clock.

Manufacturers with multiple excise paying units around the country and fulfilling the eligibility criteria are likely to particularly benefit from this initiative as they can get their assessments done at the LTU. This would enable uniformity in assessment practices, especially in the case of excise duty.

"We begin the LTU scheme from April 1, 2006 by making it an optional scheme. After wrestling with this idea for some time, I concluded that it is best that we start with an optional scheme rather than mandatory scheme," the Finance Minister, Mr P. Chidambaram, said after flagging off a road show for LTUs here today.

He also indicated that the concept of LTUs would be expanded in the coming years both geographically as well as in terms of the eligibility criteria.

"Let us start with the proposed system and as we gain from experience we can expand. The numbers with us show that under the proposed eligibility criteria 582 entities would be eligible to join the LTUs on day one.

If all the 582 entities join the scheme in financial year 2006-07, we would have made a splendid beginning," he said.

Of the 582 eligible entities, 145 entities are from Delhi, 196 entities from Mumbai, 56 from Bangalore, 101 entities from Kolkata and 84 from Chennai.

For manufacturers with multiple excise-paying units, a senior Finance Ministry official clarified that their excise payments would be clubbed to determine the eligibility for being included in the scheme.

Mr Chidambaram said the LTUs offer an opportunity for the taxpayer as well as the tax collector to discharge their respective obligation in a hassle-free and dispute-free environment. "The idea is to lower the cost of compliance," he said.

The Finance Ministry also promised trade and industry that the proposed LTUs would be established as modern offices, completely wired and with assessment and payment facility through the electronic media. Further, he said that senior officers who are specially trained would be made available to help in assessment and payment of taxes.

Of the proposed five LTUs, three LTUs would he headed by chief commissioners of income-tax and two by chief commissioners of central excise.

Related Stories:
Large taxpayer units scheme likely from April 1
Corporates have to pay Rs 1 cr excise a year to be termed `large taxpayer unit'

More Stories on : Financial Policy | Taxation

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