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Strategies will evolve in April to widen tax base
April, 02nd 2010

The Direct Taxes Code, which got flak from various quarters, is being redrafted and the government is planning to put it in public domain once more before tabling it in Parliament. S S N Moorthy, chairman, Central Board of Direct Taxes (CBDT), says all concerns are being addressed. Apart from working on a tax code proposing a simple system, the department is also taking various measures to improve tax compliance and collections, Moorthy tells Vrishti Beniwal in an interview. Edited excerpts:

Apart from the nine areas identified by the finance minister, what other changes will be made to the Direct Taxes Code?
We are redrafting some provisions based on the suggestions of various stakeholders. The (revenue) department also had some concerns. I cannot comment on the areas that will undergo a change, but we are trying to address all issues raised within and outside the department. We will redraft the code in a workable fashion. After that, it will go in the public domain once again. It may take more than two months.

There is a lot of opposition to the proposal of taxing savings at the withdrawal stage, which are currently tax exempt. How will you treat the new pension system, which attracts tax at withdrawal?
We are addressing all issues on EEE (exempt exempt-exempt) and other proposals of the code. I cannot say more at the moment.

How close are the direct tax collections to the revised Budget target of Rs 3,87,000 crore? What is your outlook for the next year?
Direct tax collections (as on March 29) are at Rs 3,60,000 crore. We are making all efforts to reach the target. The next years target of Rs 4,30,000 crore is very ambitious. Our priority would be to focus on all tax yielding areas, international taxation, transfer pricing and strengthening the TDS mechanism.

What steps are being taken to improve tax compliance and collections?
A lot of steps have already been taken. We will evolve strategies in the beginning of April to widen the tax base.

Do you think change in income tax slabs in the Budget would bring more people in the tax net?
It might, because we saw better compliance in the past whenever income tax slabs were changed.

How will you expedite the process of income tax refunds?
This year we gave over Rs 51,000 crore of refund, which is 50 per cent more than last year. We have got refund banks at 15 centres. They are all doing well. We will expand this to other centres periodically. We have a central processing centre functioning in Bangalore. We may expand it to two new stations.

Last year you set up eight dispute resolution panels (DRPs) for speedy resolution of transfer pricing disputes. We understand they are already burdened with a lot of applications?
So far, we have not received any such feedback. We will form new panels as and when required.

DRPs could take up to nine months to decide on a case. Would a delay in disposal of cases affect your revenue collections?
Initially there will be some delay. It will have some impact on revenue collections in the first year.

How have talks with other countries progressed on the Double Taxation Avoidance Agreement?
Negotiations are on to persuade all countries to come on board. Issues vary from nation to nation. What we want is transparency and exchange of information.

Have you finalised the guidelines on safe harbour?
A committee has been formed to look into that. It has about six months to streamline the procedure.

There is shortage of manpower in CBDT. How are you addressing the issue?
We are going for cadre review by which we will rationalise manpower. The process is on and a report in this regard will be prepared in about a year.

Have you taken a decision on the corporate affairs ministrys proposal of not taxing Satyams inflated income?
I have not received any such proposal yet.

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