Revenue dept to seek more tax officials

NEW DELHI: After waging a long battle on whether SEZs should get tax breaks, the revenue department has decided to plug the leaks. The department has decided to approach the empowered group of ministers on SEZs to sanction a substantial increase in the number of tax officials, in a bid to ensure companies setting up shop in SEZs pay their dues.

The department faces an acute shortfall of field-level staff on the direct and indirect tax fronts, and wants approval from the ministerial group to prevent revenue leakages.

Senior officials told ET, they will also ask for funds to put in place equipment and measures that will allow for unobtrusive monitoring of the zones. The department is preparing a proposal in this regard, they added. Finance minister P Chidambaram had recently said, each SEZ would require 17 additional personnel from the department.

Going by this estimate, the Central Board of Excise and Customs will have to hire 2,550 personnel, even if the number of zones is capped at 150. But if, as expected, the number goes up to 350, the technical manpower requirement will shoot up to almost 6,000 — about a fifth of the effective working strength of the indirect tax department as on October ’05.

The department is expected to shortly finalise a proposal for recruitment of an additional 1,400 personnel to the Cabinet. The measure is intended to address the immediate resource crunch.

The finance ministry had earlier projected a potential revenue loss of over Rs 90,000 crore, because of these zones. The International Monetary Fund too has echoed this view to the revenue department because of the tax holiday.

The commerce ministry, on the other hand, contends that the net revenue gain to the government as a result of SEZs — from increased economic activity — would be Rs 44,400 crore.