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Government asks officials to meet income tax collection target
February, 12th 2015

Taxmen are being told to walk a fine line they are not exactly accustomed to. After directing them to follow a non-adversarial regime, tax officials in various commissionerates in the country are being nudged to meet the income tax collection target.

Unlike a formal communique, as was done earlier, aimed at minimising tax terrorism and harassment, this time the message is being conveyed over phone calls and meetings. "Now, we are being told to meet the target. It won't be easy. One doesn't really get the point. There's always some degree of harshness in tax collection. It's unavoidable," said a senior officer in the income tax department.

Also, three weeks ago, tax offices received verbal instruction to hold back tax refunds till March 31. Of the total income tax target of more than Rs 7.35 lakh crore, the government expected to raise Rs 2.84 lakh crore as personal income tax and Rs 4.51 lakh crore as corporate income tax - an increase of 17.6% and 14.6% over the respective revised estimate numbers for FY14. But actual collections between April and December have risen by 8% and 7% to Rs 1.66 lakh crore and Rs 2.77 lakh crore for personal income and corporate tax, respectively.

"We expect a shortfall of Rs 40,000 crore or even more..," said another official with the tax office. Chances are that in meeting this target, assessing officers would be forced to raise more tax demands, conduct surveys and verifications.

"There are cases where we may not wait till the appellate authority gives it decision-...Most circles had slowed down the collection effort after November notification," said the person. On November 7, the Central Board of Direct Taxes, the apex body under the ministry of finance, had instructed the department that in a constant endeavour "towards a non-adversarial tax regime", supervisory officer should play "a more pro-active role in monitoring and guiding assessments towards ensuring that highpitched assessments without proper basis are not made and that lengthy questionnaires or summons without due application of mind are avoided." After this, many officers had chosen to stay away from the field, said an officer.

The present government's intention is to end the so-called "tax terrorism" arising out of tax demands and scrutiny notices of the past few financial years, but the directives from the top could well have slowed down the tax machinery that is used to functioning in a particular way. While it's unclear as to what extent tax officers would have to step out and go back to their old customary ways in raising tax, it's certain that they will have to work a little extra to make up for the lost time. "Collection typically picks up in the last quarter. However, there will be some pressure on the I-T department, thanks to poor indirect tax collection," said the person. Between April and December 2014, personal income tax grew at 20% and corporate income tax at 10% — as against 8% and 7% this financial year.

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