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Business News/ Politics / Policy/  Narendra Modi tells income-tax dept to double taxpayer base to 100 million
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Narendra Modi tells income-tax dept to double taxpayer base to 100 million

Narendra Modi asks the tax officers to focus on 5 pillars of administrationrevenue, accountability, probity, information and digitisation, or RAPID

Narendra Modi stressed that there does not need to be a trade-off between tax enforcement and taxpayer friendly steps. Photo: ReutersPremium
Narendra Modi stressed that there does not need to be a trade-off between tax enforcement and taxpayer friendly steps. Photo: Reuters

New Delhi: The income-tax department has a new target: doubling its taxpayer base to 100 million.

Handing down the target to the department, Prime Minister Narendra Modi said this has to be achieved with a soft touch by creating an enabling environment for voluntary compliance.

In his address to senior officers of both the direct and indirect tax departments at the inaugural session of Rajasva Gyan Sangam, a conference of tax administrators, the prime minister said that there does not need to be a trade-off between tax enforcement and taxpayer-friendly steps.

Modi stressed that while there should be respect for the rule of law among citizens and measures to disincentivize tax evasion, people should not be harassed.

“The trust deficit between the income-tax department and taxpayers should be bridged. There is no shortage of good officers and of good taxpayers. This was the prime minister’s message," said Atulesh Jindal, chairman of the Central Board of Direct Taxes (CBDT).

The prime minister outlined for the tax department a five-point agenda called RAPID—Revenue, Accountability, Probity, Information and Digitization—and stressed the need for tax officials to carry forward the agenda.

India’s taxpayer base is 54.3 million and the aim is to increase it to 100 million, minister of state for finance Jayant Sinha said at a press briefing after the interaction with the prime minister.

He pointed out that there are 250 million households in the country, of which about 150 million may be agricultural households that don’t have to pay tax. “But this still leaves us with 10 crore (100 million) households," Sinha said.

To be sure, increasing the taxpayer base is easier said than done. Union finance minister Arun Jaitley has made it clear that the government will not tax agricultural income despite Economic Survey 2015-16 making a case for taxing the well-off sections in agriculture, industry, services and real estate.

Progressive raising of income- tax exemption limits has also led to many taxpayers dropping off the list of taxpayers in the country.

According to B.M. Singh, the former chairman of CBDT, achieving a taxpayer base of 100 million will be difficult.

“The tax department has been trying for so long to increase the taxpayer base. But you need to take into account the number of people below poverty (line) and those with pure agricultural income. Also, because of increasing the exemption limits, many taxpayers go out of the tax base," he said. “Due to the cash economy, many small traders also go out of the loop."

Economic Survey 2015-16 had pointed out that if the government had not raised the income- tax threshold in 2012-13 and maintained it at 1.5 lakh, an additional 16.5 million taxpayers would have remained in tax net.

On Thursday, in the first of its kind Gyan Sangam for tax officials, Prime Minister Modi urged both the tax wings, CBDT and the Central Board of Excise and Customs, to move the entire taxpayer-related services online—e-filing, e-processing, e-refunds and e-assessment.

In the last two years, the tax department has taken a number of steps to move the tax return and processing online. It has also launched a pilot for online assessment.

Since coming to power in May 2014, the National Democratic Alliance (NDA) has tried to reset the interface with the taxpayer. It has taken steps to reduce litigation, minimize human interface and simplify tax laws.

Modi also stressed the need for tax administrators to engender trust in the system.

The suggestions given by tax officers include the need for a tax facilitation act which would apply to both central and state governments, simplify tax laws and explain these laws in local languages.

The tax officers also pushed for better physical infrastructure, increased digitization and moves toward a paperless system for internal communication.

“The prime minister pointed out that 92% of the taxes come in automatically through TDS (tax deducted at source) advance tax and self assessment. Only the remaining 8% comes through scrutiny for which there is such a large manpower. So, focus should be on increasing the tax base," said revenue secretary Hasmukh Adhia on Thursday.

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Published: 16 Jun 2016, 02:53 PM IST
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