BIG GAINS FROM SMALL TOWNS

Ravikumar.G | Last updated: 27 September 2007

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Few days ago when an income-tax raid in Chirkunda, city with a population of little over 39,000 (according to 2001 Census) in Dhanbad district of Jharkhand, yielded a disclosure of over Rs 70 crore of concealed income, it made news only in local dailies. However, the same news would have made it to all the national dailies if it happened half a decade ago. "There has been a stupendous growth in the tax collection from smaller towns in the last 5-6 years, indicating their resurgence," says a top official at the Central Board of Direct Taxes (CBDT), the top most administrative and policy-making body for direct taxes in the country. The I-T raid on Chirkunda succeeded because the town is now a key place in the coal belt of Eastern India, but looking at the tax collections across similar smaller cities in the country, the growth story remains the same every place. Obviously, cities like Lucknow, Patna, Ahmedabad, Hyderabad, Chandigarh, Meerut and Pune are on the radar of the I-T department as potential growth centers for revenue generation. "Most metro cities, including Mumbai that contributes over 35% of the total direct tax collection of the country, are reaching saturation points. In future, smaller towns will give the required revenue push," says another CBDT official. No wonder, increasingly, the I-T department is widening its network in the country. Every year at least 5-7 cities are added to the network of the department to cover more revenue centers. Of the 650 districts in the country, I-T department used to be present in about 425 districts about four years ago and now, it is present in about 530 districts. Even a significant chunk of the 7,050 employees that the department will add in the coming months will join these mofussil areas to boost the revenue collection. Look at the latest tax collection figures too. During April-August, corporate tax collection from Lucknow jumped over 140% to Rs 182 crore while Patna reported a 146% jump at Rs 220 crore. While cities like Ahmedabad bought Rs 1,249 crore to tax kitty, registering about 38% rise. On the personal income-tax front, cities of Ahmedabad, Kanpur, Pune, Chennai, Chandigarh, Lucknow, Kanpur and Bhubaneshwar have reported more than 50% rise in collections during April-August. Acknowledging the percolation of economic growth in these towns and awareness about various investment options, the finance ministry too has fixed higher targets for relatively new taxes like the Securities Transaction Tax (STT), a levy on deals made by selling or buying shares. For instance, Ahmedabad city is expected to contribute Rs 7.08 crore towards STT for 2007-08 while last year its target was only Rs 0.2 crore