Panel asks govt to make strenuous efforts to widen tax base
April, 23rd 2013
A Parliamentary panel today asked the government to make strenuous efforts for widening tax base which has not grown in tandem with increase in growth in income and wealth over the years.
The report of the Standing Committee on Finance tabled in Parliament said the Permanent Account Number (PAN) has been allotted to more than 11 crore entities, while income tax returns have been filed by only 3.5 crore.
Further, a huge gap has also been noticed between number of entities to whom Tax Deduction and Collection Account Number (TAN) has been allotted vis-a-vis number of deductors filing TDS submissions.
"The Committee therefore desire that strenuous efforts should be made by the (Revenue) Department both in terms of policy as well as enforcement action in widening the tax base, which obviously is not commensurate with the growth in income and wealth witnessed over the years," the report said.
In 2011-12, assessess in the income slab of up to Rs 5 lakh comprised of 98.38 per cent of total assesses. While above 20 lakh slab comprises of a meagre 0.38 per cent of total assesses.
The panel headed by senior BJP leader Yashwant Sinha said that situation presented before it clearly suggest income tax base in revenue terms is "rather narrow" which has adversely affected tax buoyancy.
On progressive tax policies, the report said tax policies presently being pursued are "seemingly not as progressive as they ought to be".
"The Committee would also like to urge the Department to widen the tax base in a genuine manner by adding new assesses to the base at the higher income slabs rather than plateauing it off by way of accretions at the lower income slabs, which will only increase the number of returns without commensurate revenue," it added.
While in the 2008-09, over 17.84 lakh new assesses were added, the number was only about 7.21 lakh in 2011-12.
With a view to making the tax broader as also progressive in nature, the Committee had sought information on the number of new assesses added each year and percentage of tax collected from them slab-wise for the last 5 years. The report said that the department has not been able to provide slab-wise information on new assesses.
Major increase in these accounts were reported in banks such as State Bank of India, Bank of India, IDBI BankBSE -1.48 % Ltd, Indian Overseas Bank, Punjab National BankBSE -2.31 %, and Union Bank of India, it added.
On Agricultural Debt Waiver and Debt Relief Scheme, 2008, the panel said a number of discrepancies in implementation of the scheme ranging from exclusion of beneficiaries to violation of guidelines in reimbursement of loans has been recently reported.
The Committee, therefore, urge upon the Department of Financial Services to set up an exclusive monitoring wing for the implementation and monitoring of various schemes under its jurisdiction, it said.
Further, it said, in order to preempt such large scale deviation from the envisaged objectives of the schemes, the Committee desire that the Department of Expenditure should oversee the outcome of expenditure periodically in such big schemes.
On capital infusion in public sector banks (PSBs), the panel noted that when the country is facing fiscal deficit and resource constraints, the government has been infusing huge amount towards capitalisation of such banks.
The Committee are of the firm view that the extant practice of following easy route of capitalising PSBs from the budget would not only numb the PSBs but may also make them inefficient.
"Considering the fiscal consolidation and the need for maintaining capital adequacy in PSBs to meet BASEL III norms, the Committee expect the Ministry to propel PSBs to generate funds internally also for their recapitalisation instead of depending on budgetary support alone," it said.
The Finance Ministry needs to expedite the process of setting up the financial holding company at the earliest to meet the capital requirements of PSBs.
"The Committee had been consistently recommending to take corrective measures to arrest such an erratic trend of projection of fund requirements and formulate realistic estimates," it said.
However, it said, substantial reduction in Revised Estimate stage and consistent underutilisation of funds indicate that there is no discernible improvement.