The Hindu Business Line : Dismay over slow adoption of large taxpayer units

New Delhi, Dec 10 The Finance Ministry has expressed disappointment over the “very slow response” to the adoption of large taxpayer units (LTU) bylarge taxpayers in the Indian corporate sector. Adoption of LTUs has so far been voluntary for the large taxpayers.

The Government wants corporate India to see LTUs as an administrative mechanism rather than as a “confrontational institution” that criss-cross information between excise and income-tax department.

LTUs bring together the large taxpayers of a country and offer them a single window for all taxes — direct and indirect. “We have waited for three years and the only LTU is in Bangalore. I cannot understand the rationale why productive sector has not opted into the LTU when we have more or less set up the infrastructure not only in Bangalore but also in Chennai, Mumbai and Delhi. Very soon Calcutta will also have infrastructure,” Dr Parthasarathi Shome, Advisor to the Finance Minister, said recently at a tax conference.

He highlighted that in any event, in about 3-4 years, the comparative informational exchange between departments would occur not only within the Central Government but, with the advent of goods and services tax (GST), between the Centre and the States. “This fear (information exchange between income-tax and excise departments) is not reflective of what is happening in India’s productive sector today and we have to get out of that,” Dr Shome said.

Review of tax treaties

Dr Shome expressed surprise that the LTU concept had not established in India even as he pointed out that other countries had moved on from large taxpayer units to again re-focus on small and medium taxpayers.

The senior Finance Ministry official also said that efforts were on to review and revise the various tax treaties in the changed context of outward investments of Indian firms likely to exceed foreign direct investment (FDI) inflows during the current fiscal.

“The nature and premise of DTAAs has changed. Today, India is not only importing capital, it is also investing abroad in a big way. We are looking at what is to our benefit and advantage not only as a protective of our taxation when foreign capital comes to us and returns go abroad. Also, when our capital goes abroad and returns to us, and encourage them to return to us through the market mechanism. We are harmonising with the rest of the world,” he said.