Finance Minister Pranab Mukherjee today asked commissioners of the income tax departmentand customs to focus on low growth in service tax, the high level of arrears and amounts locked in litigation and adjudication.

During the meeting with chief commissioners and commissioners of income tax, customs and central excise in Mumbai, Mukherjee also expressed concerns over the slow growth in direct tax collections in the Mumbai zone. He pointed out that there was a decline in collection of tax deducted at source (TDS) a major source of revenue for the government.

He also asked the revenue department to create a formal risk management institution to improve the voluntary tax compliance in India.

The achievement of direct tax collection largely depends on collection from Mumbai. Therefore, revenue collection should be monitored effectively and special efforts made to achieve not only the budgeted target but also to exceed it, Mukherjee said in his address.

Over half the direct tax collections come from the Mumbai zone and a slow growth could hit overall collections.

While urging indirect tax officials to improve on the performance so far, he said service tax collections that grew eight per cent in this financial year needed to be analysed.