Chidambaram doles out more pay, perks for revenue officials

Shishir Sinha
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P. Chidambaram
P. Chidambaram

To motivate bureaucrats to work for higher tax collection

You have to spend in order to earn, goes the saying.

Finance Minister P. Chidambaram is clearly aware of this and has managed to convince his colleagues in the Government to spend an additional Rs 450 crore in pay and perks for officers belonging to the Indian Revenue Service (IRS), who form the backbone of the tax collection machinery.

In one of the most sweeping revisions in the complex system of pay and posts which dictates the pecking order in India’s bureaucratic machinery, IRS officials will now be able to reach the highest rank in the administrative system — that of Special Secretary to the government — after 37 years of service.

However, this is still a few years behind the number of years an officer belonging to the ‘crème de la crème’ of the civil services — the Indian Administrative Service (IAS) — would take, even though both IRS and IAS officials are chosen on the basis of the same selection examination.

So far, the top level of the civil service was the zealously guarded preserve of the ‘senior services’ — the IAS, and its relatively minuscule, but prestigious counterpart, the Indian Foreign Service.

More posts

Barring appointments as Chairman or Members of the Central Board of Direct Taxes (CBDT), which are Secretary-rank posts, IRS officers could at best hope to reach the Joint Secretary level. All this is set to change.

The Government has also cleared the creation of as many as 20,751 additional posts in the Revenue Department.

The argument for creating the new posts, as well as raising the rank grades, was simple. Unlike other arms of the administration, every rupee spent on the Revenue Department will generate many times that much in additional tax collections. More than 500 times, in this case, since the Cabinet note projected that the additional Rs 450 crore a year outgo towards the new posts (as well as the higher pay for those making it beyond the Joint Secretary grade) would result in more than Rs 25,000 crore of additional tax collections yearly.

“Now, demoralisation of the cadre will be arrested and people will work for more revenue collection,” Sidhartha Pradhan, President of the Indian Revenue Service Association, an all-India body of tax officials, said.

There are reasons for this ‘demoralisation.’ An IAS officer reaches the Junior Administrative Grade after seven years, while for an IRS officer, this takes 10 years. Similarly, for the Higher Administrative Grade, an IAS officer takes 25 years, while an IRS officer spends 33 years. Pradhan said that after IAS, IRS officers were “most important,” as they bring revenue. “They should not be treated as second rate citizens,” he said.

I-T collections

Income-tax collections grew to Rs 5.59 lakh crore in 2012-13, from Rs 1.04 lakh crore in 2003-04, a compounded annual growth rate of 30 per cent. But the strength of the Income Tax Department came down to nearly 57,000 from 62,000 during the same period. Now, the trend is likely to reverse.

With the implementation of the restructuring exercise, 26 Chief Commissioners of Income Tax and Directors-General of Income Tax will be upgraded to apex level, with the posts known as Principal Chief Commissioner and Principal Director-General. Ninety-one Chief Commissioners of Income Tax will remain as Chief Commissioners or Directors-General, but will be placed in the Higher Administrative Grade-Plus. Both these grades were earlier not available for IRS officers.

Altogether, an additional 1,349 Indian Revenue Service officers will join the service over five years with 270 posts a year being filled in the next four years and 269 in the fifth. Half of these will be through direct and fresh recruitment, and the rest through promotion.

With the taxmen getting their pound of flesh, there is a fear that the Indian Police Service (IPS) — which has so far been second in the pecking order — will raise its voice, sparking a new ‘seniority’ race.

(This article was published on July 7, 2013)
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Union Budget 2014-15 Highlights

  • Following are the highlights of the Union Budget 2014-15 presented by Finance Minister Arun Jaitley in Parliament on July 10, 2014
  • Income-tax exemption limit raised by Rs 50,000 to Rs 2.5 lakh and for senior citizens to Rs 3 lakh
  • Exemption limit for investment in financial instruments under 80C raised to Rs 1.5 lakh from Rs 1 lakh.
  • Investment limit in PPF raised to Rs 1.5 lakh from Rs 1 lakh
  • Deduction limit on interest on loan for self-occupied house raised to Rs 2 lakh from Rs 1.5 lakh.
  • Committee to look into all fresh tax demands for indirect transfer of assets in wake of retrospective tax amendments of 2012
  • Fiscal deficit target retained at 4.1% of GDP for current fiscal and 3.6% in FY 16
  • Rs 150 crore allocated for increasing safety of women in large cities
  • LCD, LED TV become cheaper
  • Cigarettes, pan masala, tobacco, aerated drinks become costlier
  • 5 IIMs to be opened in HP, Punjab, Bihar, Odisha and Rajasthan
  • 5 more IITs in Jammu, Chhattisgarh, Goa, Andhra Pradesh and Kerala.
  • 4 more AIIMS like institutions to come up in AP, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP
  • Govt proposes to launch Digital India’ programme to ensure broad band connectivity at village level
  • National Rural Internet and Technology Mission for services in villages and schools, training in IT skills proposed
  • Rs 100 cr scheme to support about 600 new and existing Community Radio Stations
  • Rs 100 cr for metro projects in Lucknow and Ahmedabad
  • Govt expects Rs 9.77 lakh crore revenue crore from taxes
  • Govt’s plan expenditure pegged at Rs 5.75 lakh crore and non-Plan at Rs 12.19 lakh crore.
  • Rs 2,037 crore set aside for Integrated Ganga Conservation Mission called ‘Namami Gange’
  • Kisan Vikas Patra to be reintroduced, National Savings Certificate with insurance cover to be launched
  • FDI limit to be hiked to 49% pc in defence, insurance
  • Disinvestment target fixed at Rs 58,425 crore
  • Gross borrowings pegged at Rs 6 lakh crore
  • Contours of GST to be finalised this fiscal; Govt to look into DTC proposal.
  • ‘Pandit Madan Mohan Malviya New Teachers Training Programme’ launched with initial sum of Rs 500 crore
  • Govt provides Rs 500 crore for rehabilitation of displaced Kashmiri migrants
  • Set aside Rs 11,200 crore for PSU banks capitalisation
  • Govt in favour of consolidation of PSU banks
  • Govt considering giving greater autonomy to PSU banks while making them accountable
  • Rs 7,060 crore for setting up 100 Smart Cities
  • A project on the river Ganga called ‘Jal Marg Vikas’ for inland waterways between Allahabad and Haldia; Rs 4,200 crore set aside for the purpose.
  • Govt proposes Ultra Modern Super Critical Coal Based Thermal Power Technology
  • Expenditure management commission to be setup; will look into food and fertilizer subsides
  • Impasse in coal sector will be resolved; coal will be provided to power plants already commissioned or to be commissioned by March 2015
  • Long term capial gains tax for mutual funds doubled to 20%; lock-in period increased to 3 years
  • Rs 4,000 cr set aside to increase flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.
  • EPFO to launch the ‘Uniform Account Number’ service to facilitate portability of Provident Fund accounts
  • Mandatory wage ceiling of subscription to EPS (Employee Pension Scheme) raised from Rs 6,500 to Rs 15,000
  • Minimum pension increased to Rs 1,000 per month
  • Union Budget 2014: List of products getting cheaper/ costlier

  • Finance Minister Arun Jaitley today spared the common man from price hikes by keeping duties on commonly used day-to-day items unchanged but made it costlier for smokers and tobacco consumers with a steep increase in excise rate in tax proposals in Budget 2014—15.
  • Following is a list of what will be cheaper and costlier:
  • CRT television
  • LED/LCD TVs especially below 19 inch
  • Footwear priced between Rs 500 to Rs 1,000 per pair
  • Soaps
  • E—book readers
  • Desktop, laptops and tablets
  • RO based water purifiers
  • LED Lights, fixtures and lamps
  • Pre forms of precious and semi—precious stones
  • Sports Gloves
  • Branded petrol
  • Matchbox
  • Life micro insurance policies
  • HIV/AIDS drugs and diagnostic kits
  • DDT insecticides
  • Cigarettes
  • Aerated drinks with sugar
  • Pan masala
  • Gutka and chewing tobacco
  • Jarda scented tobacco
  • Radio Taxi
  • Imported electronic products
  • Portable X—ray machines
  • Half cut/broken diamonds.


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