Target non-TDS income group, cash economy to widen tax net: House panel

NEW DELHI: Parliament's standing committee on finance has asked the government to use its resources with "strict vigil" over non-tax deducted at source (TDS) income group and those above Rs 5 lakh annual income bracket in order to widen the tax base.

The committee, headed by M Veerappa Moily, said that the time has come to reinvent the tax collection approach and to move toward the untapped or lesser tapped brackets of income which mostly comprise the unorganised sector and the cash economy.

In its report tabled in Lok Sabha on Thursday, the committee said that taxpayers in the lowest income slab of up to Rs 5 lakh constitute roughly 98% of the total taxpayers, but they contribute only 10% of the tax revenues.

"In order to further expand and broaden the tax base, the government should bring the unorganised sector under the tax net," the report said.

On the issue of tax arrears, the committee said that the revenue department under the finance ministry "clearly lacks a coherent vision".

The Panel said there is an emergent need of a two-pronged approach to tackle the menace of tax arrears --focused quantitative approach to tackle outstanding tax demands and recovering them in a time-bound manner, and an enhanced qualitative approach, especially at the level of assessing officers.

"This, the committee hopes, will help in minimising the quantum of tax arrears and also preventingminimising further occurrence of tax arrears," the report said.

The panel also said that maintaining a centralised database on actual yield of searches and surveys will help analyse and throw light on the efficacy of these operations, thereby nailing the chronic and wilful tax evaders, it said.