The finance ministry on Saturday clarified after a series of flip-flops that Prime Minister Narendra Modi had not set a target for widening the income tax base to 100 million assessees at the Rajasva Gyan Sangam, a two-day retreat for revenue officials.
"It is clarified that though the Prime Minister asked the income tax department to widen the tax base and take suitable action against non-filers and tax evaders, no specific target to expand the tax base to 10 crore (100 million) was prescribed," said the clarification issued on Saturday.
Minister of State for Finance Jayant Sinha had in a briefing after a closed-door session at the Rajasva Gyan Sangam on Thursday said, "The Prime Minister laid out certain goals and objectives for officials to increase the tax base to 10 crore (100 million) from 5.43 crore (54.3 million) at present."
This was denied by Revenue Secretary Hasmukh Adhia on Friday during the concluding press conference, where he clarified no such target was issued by Modi. "The Prime Minister only told tax officers that there were 10 crore (100 million) non-farm households, of which the maximum possible should be brought under the tax net," he added.
According to Sinha, Modi had also pointed out that of the 250 million households in the country, 150 were farming households and the remaining 100 million should be under the tax net.
An official release on Friday after the conclusion of the two-day Rajasva Gyan Sangam said, "At the same time, he (the Prime Minister) asked them to knock on the doors of non-tax payers so as to increase the number of taxpayers to at least 10 crore (100 million)."
On Saturday this was revised to "the Prime Minister asked them to knock on the doors of non-tax payers so as to increase the number of taxpayers. He asked the income tax department to widen the tax base and take suitable action against non-filers and tax evaders."
Experts said at the current 10-12 per cent annual growth in the number of income tax assesses, the target could be met in another six years. The number of income tax assessees grew 60 per cent in from 34 million in 2010 to 54 million in 2015.
As part of a transparency drive, the government made public data that showed 28.7 million individuals filed income tax returns in 2012-13, but 16.2 million did not pay any tax, leaving the number of taxpayers at 12.5 million, or 1 per cent of the country's population of 1.23 billion at that time.
Modi in his speech said 92 per cent of the tax revenue came through tax deducted at source, advance tax and self- assessment tax. The remaining 8 per cent was collected after scrutiny.
Rakesh Nangia, managing partner, Nangia and Co, said it would be difficult to widen the tax net to 100 million. "Since no time limit was given, it should be taken as an expression that it should be widened. You cannot expect 100 per cent growth in three years," he added.
Another expert pointed out that there were structural challenges in a country dependent on farm incomes. "The government should target people earning money and not paying taxes," he said.
Modi is reported to have said if 42,000 officials of the Central Board of Direct Taxes were engaged in ensuring tax revenue, the net should be cast wider. He outlined a five-point charter for tax administrators - RAPID, which stands for revenue, accountability, probity, information and digitisation - to reform the tax system.
The Rajasva Gyan Sangam was attended by 250 officers of the rank of principal chief commissioner, chief commissioner and principal commissioner from the CBDT and 170 from the Central Board of Excise and Customs. This was the first time the two boards came together for a joint conference with simultaneous sessions.