The Central Board of Direct Taxes (CBDT) has begun work on outlining a strategy to deal with the challenge of growing tax collections and coping with the increasing number of taxpayers. It is readying a vision 2020 document amidst an attempt by the government to reform the regime for direct taxes through a new direct taxes code, a finance ministry official told ET.

A simple direct taxes code will put in place a simple regime but require more people to file returns.

The CBDT, the apex direct taxes body in the country, has set up a special task force to prepare the vision document that will guide the tax department in the formulation of its future strategy. If the special group manages to finalise the document well in time, an announcement is expected to be made in the forthcoming budget, the official said.

Direct taxes as a percentage of gross domestic product has risen to 6.5% in 2008-09 from 2.8 % in 1995-96 . Though increased tax collections has helped the government find funds for its programmes , it has also increased the work pressure on the department. The special group will look into the new needs that the department could confront in future as the number of taxpayers and return filers goes up.

Processing of returns has a backlog even though the number of tax filers has remained stagnant in the last three years. The group will also examine ways and means to improve taxpayer services and adoption of new technologies in the changed scenario over next few years. The idea is to improve the tax administration with a focus on taxpayer services , he said.

New challenges such as dealing with sophisticated means adopted by tax evaders will also be dwelled upon in the vision document.