Modernization of the country's tax administration by harnessing information technology, treating taxpayers as ?customers' and empowering the tax administration machinery
are among the steps that should be taken to make the country's tax collection efficient and effective, said Parthasarathi Shome, chairman of Tax Administration Reforms Commission, on Monday.
Shedding the classical attitude of ?respect all suspect all' and engaging with the taxpayers in a more compassionate manner would go a long way in enhancing and improving the tax administration which will eventually lead to greater tax compliance, Shome said in a meeting organized by Pune International Centre. "Also, important would be to restrict the time over which a dispute over tax assessment can drag as the present liberal justice system allows the contenders to appeal to different courts and file multiple appeals in same courts," he said.
Shome said the country can move to a regime in which a business assessee is recognized by the sector in which he operates and his permanent account number (PAN) and not by his location. He asserted that it is imperative to assess and scrutinize business income by applying various direct and indirect taxes simultaneously rather than administering the various taxes separately. "This will send a message that avoidance in one tax law can come to light in scrutiny under another tax law," he added.
The returns and other statements which taxpayers file with the government contain huge and diverse data which the tax administration can analyze using information technology to know the income, spending and investment patterns of taxpayers, which will ultimately help understand them better, Shome said.
On goods and services tax (GST) and direct taxes code (DTC), Shome said they are good pieces of legislation, but need to have a structure that will function smoothly and achieve the purpose of simplifying tax administration. "There are sweeping statements such as ?implementing GST will improve corporate toplines by 2-3%, but this may not be the case when it comes to actually moving to the GST regime," Shome said, adding that the latest DTC draft is quite workable after ironing out the few anomalies it may contain.
The country's public expenditure has been losing quality as most of it goes to non-capital, non-development purposes. If this trend is checked by scrapping popularity-driven and politically-motivated programmes and schemes, the country's tax collection can make a significant contribution to the development process, Shome said.