India's tax base can rise to 5 crore if tax department gets manpower: Parthasarathi Shome

KOLKATA: India can expand tax base by another 1.5 crore over the 3.5 crore tax payers the country already has, says Parthasarathi Shome, advisor to the country’s finance minister.

He said that there is no target for the tax department but the number can grow “provided financial and human resources are given to the tax administration”.

The income tax department has been facing shortage of manpower, leading to a less effective management of tax collection and services provided to the tax payers.

Shome was in Kolkata to address the chartered accountants at the annual conference of the ACAE Chartered Accountants’ Study Circle.

He said that work on direct tax code or DTC is progressing fast and the DTC bill is expected to be placed in the Monsoon session of the Parliament. DTC will replace the country’s old income tax law and aims to bring more people and companies under tax net with minimum exemptions.

The Monsoon session is slated to begin on August 5 and end on August 30.

“For building and nurturing environment for investors, India needs to complete the work of DTC and GST (goods and services tax) in an internationally comparable manner,” the veteran tax policy maker said. He is set to head the Tax Administration Reforms Commission (TARC), which has the mandate to review the tax rules enforced by officials.

In case of GST, he said that the technical and structural difficulties have largely been solved while the work on inter-state GST administration is on. The central government will administer it with a computer network.

“If there is inter-state trade, the business should be ultimately get back the input tax credit. That mechanism and computer framework needed to be solved,’ Shome said, adding: “A correctly configured tax policy can help to generate economic growth and prosperity.”.