The Hindu Business Line : ‘India has the most cost-effective tax administration’

Tax payer unit: The Union Finance Minister, Mr P. Chidambaram, flanked by the Vice-President - World Trade Centre & President - AIAI, Mr Vijay Kalantri, and the Minister of State for Finance, Mr S.S. Palanimanickam, at a function in Mumbai on Friday.

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Mumbai, March 28 India has the most cost-effective tax administration regime as the cost of tax collection is just 60 paise per Rs 100, which is among the lowest in the world, Mr P. Chidambaram, Union Finance Minister, said here today.

Inaugurating the Large Taxpayer Unit in Mumbai, Mr Chidambaram said in case of LTUs, the cost of collection will fall even below 60 paise.

The Minister said tax collections are buoyant; tax revenues have shown over 40 per cent higher collections in the current financial year, following increased tax compliance.

With a little luck, we should exceed the target by a couple of thousand crores. “On the income-tax side, we are doing better than the Budget estimates, and we are expected to do better than the revised estimates,” said Mr Chidambaram said.

“For the financial year 2008-09, we expect to collect close to Rs 3,65,000 crore as direct tax, which is Rs 1,000 crore every day,” the Minister said.

MUMBAI REGION

Mr Chidambaram said tax collections from Mumbai region increased by 60 per cent in the current fiscal.

As on March 25, 2008, revenue collections from Mumbai amounted to Rs 1,10,421.50 crore, up by 59 per cent over the previous year’s Rs 69,890.20 crore.

Another Rs 2,000-3,000 crore would be collected by March 31, 2008, income-tax officials said.

Corporate tax collections increased by 60 per cent to Rs 72,111.60 crore, which accounted for more than 65 per cent of the total revenue.

Income-tax collections were up 52 per cent to Rs 27,074.50 crore.

Mumbai, which accounts for nearly a third of the country’s direct tax collections, has the potential for at least 150 large tax payers to join the LTU, the Minister said.

Eighteen such tax payers have so far signed up for the scheme.

Delhi unit in May

The Large Taxpayer Unit provides a taxpayer-friendly and service-oriented environment of tax administration.

Mumbai will be the third city to have an LTU office after Bangalore and Chennai. Delhi and Kolkata would be next in line to have these LTU offices. The Delhi unit would be opened in May whereas the one in Kolkata, by the latter part of this year.

The LTU is a single window unit administering both direct and indirect taxes in respect of large business enterprises.

All those assessees who have paid Rs 10 crore or more as advance income-tax or Rs 5 crore or more either as excise duty or service tax are eligible to join the LTU. The scheme is, however, optional.

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