Govt to use IT to simplify tax administration, increase collections
Better tax administration has been high on the FM’s agenda. So, a large part of what he sought to achieve in the last Budget has moved forward.
By Deepshika Sikarwar, TNN |
A World Bank-IFC-PricewaterhouseCoopers study called Paying Taxes, 2008, placed India 165 in the overall ranking. Though India’s ranking, measured on the basis of ease of paying taxes, was marginally better than its neighbour China (168), the country is far behind Maldives, Singapore, Hong Kong, UAE, Oman, Ireland, Saudi Arabia, Kuwait, New Zealand and Kiribati, which made up the top 10 nations.
However, things are looking up for tax administration. The government has made e-payment of income tax for corporates and other large taxpayers like self-employed professionals mandatory from the next fiscal.
Taking the next logical step, the government has made e-filing of tax returns mandatory for this category of taxpayers. E-payment for indirect taxes like service tax, customs and excise has also taken off.
Improvement in tax administration has been high on the FM’s agenda. It is, therefore, no surprise that a large part of what he sought to achieve in the last budget has moved forward. However, while some initiatives have taken off successfully, others have been slower to get off the ground.
Extending the refund banker scheme to ensure that assesses receive their income-tax refunds in time is one such scheme. The scheme, after being tested in Patna and Delhi, has been extended to more cities and it is only a matter of time when the whole country gets covered. This essentially involves outsourcing of tax refunds to banks, primarily SBI, instead of the IT department directly sending taxes.
However, the Central Board of Direct Taxes (CBDT) has been silent on expansion of the annual information return (AIR). At present, the income-tax department gets data on seven transactions under the AIR.
However, things are looking up for tax administration. The government has made e-payment of income tax for corporates and other large taxpayers like self-employed professionals mandatory from the next fiscal.
Taking the next logical step, the government has made e-filing of tax returns mandatory for this category of taxpayers. E-payment for indirect taxes like service tax, customs and excise has also taken off.
Improvement in tax administration has been high on the FM’s agenda. It is, therefore, no surprise that a large part of what he sought to achieve in the last budget has moved forward. However, while some initiatives have taken off successfully, others have been slower to get off the ground.
Extending the refund banker scheme to ensure that assesses receive their income-tax refunds in time is one such scheme. The scheme, after being tested in Patna and Delhi, has been extended to more cities and it is only a matter of time when the whole country gets covered. This essentially involves outsourcing of tax refunds to banks, primarily SBI, instead of the IT department directly sending taxes.
However, the Central Board of Direct Taxes (CBDT) has been silent on expansion of the annual information return (AIR). At present, the income-tax department gets data on seven transactions under the AIR.
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These include cash deposits of above Rs 10 lakh in a year in a savings account, annual credit card spend of above Rs 2 lakh, mutual fund investment above Rs 2 lakh in a year, investment in shares through public or rights issue above Rs 1 lakh, investments in bonds or debentures above Rs 5 lakh, sale and purchase of property above Rs 30 lakh and investment above Rs 5 lakh in RBI bonds.
The idea behind widening the AIR is mainly aimed at expanding the tax base and preventing tax evasion. However, since the CBDT has not notified any new transactions, it is expected that the finance minister may announce some more in the forthcoming budget.
The other major initiative large taxpayer unit (LTU), which is aimed at making life easy for corporate taxpayers, is yet to gain traction. But, this is largely because of the reluctance on the part of large taxpayers, officials say. Besides the Bangalore LTU, the tax department has not been able to introduce this in other centres, though LTUs are likely to be set up in Chennai, Delhi and Mumbai soon.
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