Finance Ministry keen to tone up tax recovery mechanism

By Our Special Correspondent

NEW DELHI, MAY 18. With income-tax and corporation tax arrears mounting to Rs. 44,476 crores, the Union Finance Ministry is reorienting its focus on tax collection to tone up the recovery mechanism in a big way. The total income-tax and corporation tax collections in 1999-2000 were Rs. 55,993 crores.

This is expected to figure prominently at the 17th conference of chief commissioners and director generals of income-tax, scheduled to be held here tomorrow. The view in the Finance Ministry is that with pressure mounting to increase revenue collections year after year and buoyancy in collections barely matching up to set targets, more attention would have to be focused on cases of tax disputes as the major portion of outstanding demand is locked up in these cases.

Consequently, the plan is to redeploy manpower and resources to make the offices of tax recovery officers more effective and purposeful and work towards minimising the increasing trend of various tribunals granting stay orders on demands raised by the Income-tax Department. Figures released by the Ministry indicate that as at February-end this year, the total outstanding demand of corporation tax and income tax was Rs. 44,476.86 crores, comprising Rs. 34,305.85 crores as arrears and a current demand component of Rs. 10,172.01 crores.

Apart from the focus on recovery, the conference is also expected to decide on further measures to reduce litigation so as to collect taxes in time. In this context, proposals on the anvil are for a further enhancement of the monetary limit of tax in effect for filing of appeal before the Income-tax Appellate Tribunal, raising the level for deciding the filing of second appeal from Commissioner of Income-tax to the Chief Commissioner of Income-tax and evolving control mechanism at the level of chief commissioners to have a check over the number of appeals filed by the commissioners. As on September 30, 1999, there were 1.12 lakh cases of appeal pending before the Income-tax Appellate Tribunal.

Another subject likely to come up for discussion is further toning up of the process of allotment of permanent account numbers (PAN) to taxpayers. In this context, it has been decided by the Revenue Department to despatch the assessment officers concerned to those applicants for PAN who have failed to get core deficiencies in their applications rectified despite requests from income-tax authorities. Another decision taken is to get all salary returns checked through computers and for this, tax accounting modules have been put in place at 15 centres and the remaining centres are to be provided with such systems before the end of this month.

The conference will also review the process of roping in more potential taxpayers by employing the one-by-six criteria more effectively. This criteria provide for a person to file a return compulsorily, irrespective of the level of income, in case one of the six stated criteria is applicable in his case. The criteria include categories such as ownership of property, motor vehicles, telephone connection, credit card membership, travel abroad and membership of expensive clubs.

Stringent application of the one-by-six criteria is expected to increase the number of taxpayers by 30 per cent this fiscal year. During 1999-2000, the department was able to detect 33 lakh additional taxpayers and this took the total number of assessees in the country to 2.14 crores at the end of March this year, up from 1.81 crores at the end of March last. In terms of revenue collections, the increased number of taxpayers has resulted in a 25.8 per cent increase in income tax collections during 1999-2000 over the previous year.

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