Urban News

Source : Business Line Date : 17.06.2009

‘Govt investing heavily to modernise tax administration’

Our Bureau

Kochi, June 16

The Union Government is investing heavily in modernising the tax administration in an efficient and cost-effective manner with the objective of delivering better service to tax payers, according to Mr Vayalar Ravi, the Union Minister for Overseas Indian Affairs.

New communication technologies for improving taxpayer experience with the tax administration are being put to use. Online return filing, electronic assessment, online payment and refunds of tax and annual information returns are being implemented, the Minister said while addressing Regional Seminar on Tax Laws organised by Southern India Regional Council of ICAI in Kochi.

There was a time when people wanted to avoid tax department as the tax rates were as high as nearly 90 per cent. With lowering of rates, efforts at widening the tax base and more tax-payer friendly approaches, the tax department has been like a service department where people are not scared of approaching. This is the reason that the revenue collections are going up in the past few years, he said.

The net direct tax collections during the first two months of the current fiscal stood at Rs 24,158 crore, up from Rs 22,840 crore last year, registering a growth of 5.77 per cent. The Government has framed tax policies not only to make the country an attractive investment destination but also to avoid erosion of tax base and maintain equity.

Auditors’ role

Mr K. Madhavan Nair, Director General of Income Tax (Investigation), Kerala and Karnataka, said that the Government had taken steps to enhance the role of auditors on the basis of the Naresh Chandra Committee report, Kumar Mangalam Birla Committee report and Narayana Committee report. One of the important recommendations of these committees is that the auditors fee should be paid out of a fund created for this purpose by the Government, instead of being paid by the clients to ensure the independence of auditors.

He also sought powers to auditors to call for all records and documents required in expressing the opinion on true and fairness of the financial statements so that auditors do not wash their hands of by qualifying their report by stating that necessary details were not furnished for their verification.

Mr Babu Abraham Kallivayalil, Vice-Chairman, SIRC of ICAI, said that the chartered accountancy profession always had a proactive role in assisting smooth tax administration both at the Central and State level. This is evident from the fact that direct tax collection has been buoyant in the last five years. In the financial year 2009-10, the Government has targeted direct tax collections of Rs 3,80,000 crore.

Vibrant economic growth and the boom in the business sector has grown up, contributing to a large increase in the realisation of tax revenues, and many intricate issues have crept up in direct and indirect taxes. Accordingly, the taxation laws are undergoing tremendous changes.

Source : The Business Line Date : 09.06.2009

Karnataka to improve revenue collections

Vishwanath Kulkarni
C.Shivkumar

Bangalore, June 9 To offset shortfalls in Central tax transfers, the Karnataka Government has stepped up efforts to enhance tax collections from the northern regions.

State Government officials said here that more officers would be appointed in the regions for improving commercial tax collections and eliminating leakages.

Karnataka has a tax to GSDP (Gross State Domestic Product) ratio of 11 per cent, among the highest in the country.

The State Government, the officials said, intended to achieve fiscal consolidation through improved revenue mobilisation.

This year, Karnataka’s own tax receipts are targeted at Rs 33,000 crore or about 12 per cent of GSDP.

The officials said that stepping up the tax to GSDP ratio would help them to improve tax collections and continue with the target of achieving a fiscal surplus.

Eyes fiscal surplus

The officials said that if the tax to GSDP ratio was raised to about 15-16 per cent, the State would easily achieve a fiscal surplus. This was without resorting to extraordinary steps, such as selling assets and stakes in the public sector undertakings.

Stepping up the tax to GSDP ratio to the targeted levels will take the tax collections in the State to Rs 44,000 crore.

This would translate into a fiscal surplus by at least Rs 3,000 crore, the officials said.

However, stepping up the tax to GSDP ratio was daunting.

A committee headed by the current Union Minister of Law and Parliamentary Affairs in 2003 had recommended raising the tax-to-GSDP ratios, through improved tax collections, in the State.

However, these recommendations were put on the backburner in view of the political instability.

higher oil prices

Besides, the State Government also had the cushion of high petroleum prices that allowed it to realise high taxes. Taxes from petroleum products generate at least 35-40 per cent of the State’s tax receipts.

Since petroleum continues to be taxed on ad valorem basis, Karnataka like other States was able to meet or exceed its tax receipt targets, when oil prices were high.

This year though, the situation was different, especially with the Centre reducing excise duties as part of the fiscal stimulus package. Besides, the Centre’s indirect tax collections were also expected to take a knock, translating into the resource transfer slippages to the States.

The officials said among the sectors targeted for improving the tax to GSDP ratio were the State excise and stamp duties.

Both these sectors have seen high level of leakages, resulting in revenue shortfalls to the State.

In addition, the officials said there were shortfalls in value-added tax collections in the northern industrial regions, through understatement of the actual value additions.

The State Government officials said that efforts were under way to plug the leakages.