Chidambaram assures of stable tax regime, confident of meeting direct tax collection target
September, 04th 2012
Finance Minister P Chidambaram on Monday expressed confidence in meeting direct tax collection target for the current financial year, along with assuring that the government will ensure a stable tax regime and non-adversarial approach in revenue collection.
"We will ensure there is a stable tax regime, there is stable tax laws and everybody adopts a non-adversarial approach to tax collection," he said after addressing Chief Commissioners and Directors General of Income Tax.
"I have asked chief commissioners to adopt non-adversarial approach to tax collection. I have told the CCITs to repeat this message to all commissioners, all assistant commissioners and deputy commissioners and ITOs," he said.
Asking assessees to pay advances taxes by due date, Chidambaram said: "paying taxes is a mark of civilization. If I pay more taxes, I should be more happy and more proud. I am making more money and I am paying more taxes".
The corporates would be paying the second installment of advance tax and individual their first installment of advance tax by September 15.
"It is our intention to achieve the Rs 5,70,257 crore direct tax collection target for the current fiscal. We will be able to achieve the target," he said, adding, the collection is growing at 10.5 per cent against the asking rate of 15 per cent.
He exuded confidence that the collection will improve in the second half of the current financial year.
Noting that India is a low tax country , Chidambaram said there is need to improve tax to gross domestic product (GDP) ratio to 12 per cent.
Tax to GDP ratio has come down to 10.1 per cent from 11.9 per cent in 2007-08.
"Our aim is to go back to 12 per cent. Even at 12 per cent India will be one of the lowest tax countries as proportion to tax to GDP," Chidambaram said.
The Finance Minister also said that tax payers should not be fearful of the tax department and tax authority.
"Tax department will be friendly, will be helpful, will be interactive, will help you pay your taxes...no body needs to harbour any unnecessary fear of the tax department," he said.
Informing tax payers that scrutiny of return does not tantamount to non-compliance, he said scrutiny confines to only a very small percentage of returns filed.
"Merely because a case is picked up for scrutiny does not mean he is tax non-compliant. No body should fear scrutiny. Scrutiny is the random way to check lakhs and lakhs of tax returns that are filed," he said.
Asked how he intends to raise tax collection, Chidambaram said "both by increasing the base, by making people file returns, encouraging them to file returns and quicken the process of assessment so that the tax can be collected".
The corporate tax rate is 30 per cent, he said, adding, but the effective tax rate for corporates is 24 per cent.
There are several sectors which are well below the average. In such cases, the average ranges from 10-22 per cent, he said.
"Those are the areas that I have asked them to focus. The corporate tax is 30 per cent, everybody must pay 30 per cent. But there are tax expenditures, there are tax exemptions, which will bring down the average," he said.
Therefore, he said, the correct way to approach tax collection is to look at the sectors which are well below the average and see whether the average can be raised.
"Even if the average is raised from 24 per cent to 26 per cent, we will collect roughly Rs 30,000 crore. It is important that we approach this matter scientifically and in a systemic way rather than a hit and run way," he added.