Early signs of revival of Indian economy visible: FM
TAX LAWS SHOULD BE SIMPLE, STABLE AND ROBUST
NEW DIRECT TAXES CODE IN PUBLIC DOMAIN TOMORROW
The Finance Minister, Shri Pranab Mukherjee has said that global economy has started stabilizing and early signs of revival of the Indian economy are visible though delayed monsoons have cast a shadow on agricultural growth. The Finance Minister opined this while inaugurating the 25th Annual Conference of Chief Commissioners and Directors General of Income Tax here today. Addressing the Conference he said that India, along with China, is being looked upon by the entire world as the engine for global economic recovery. Central revenues play a pivotal role in ensuring rapid economic development and inclusive growth by providing much-needed resources. As direct taxes have become the major source of central revenue, its role has, accordingly, increased in shaping the economic future of India, he said.
The Finance Minister emphasised that tax laws should be simple, stable and robust. Tax rates should remain moderate and multiplicity of taxes, tax exemptions and deductions should be gradually phased out to improve tax compliance. The Finance Minister informed that the government is taking a major step forward in direct tax reforms by formulating a new Direct Taxes Code, to be put in the public domain tomorrow. While drafting this Code, the best practices in the world have been studied and incorporated. Tax policies that would promote growth with equity have been reflected in the new provisions. FM exhorted the Officers to go through the draft and give their views and suggestions to enable the department to finalise the document for taking it to the Parliament in its Winter Session.
Shri Mukherjee said that direct tax collections have grown at an average annual rate of 26.8 per cent in the last five years, and have more than trebled from Rs.1,05,088 crore in financial year 2003-04 to Rs.3,38,212 crore in financial year 2008-09 increasing its share from 3.81 per cent to 6.21 per cent of the Gross Domestic Product (GDP). This impressive growth has been made possible by improvement in tax administration as well as better tax compliance, he added.
The Finance Minister said that for the current financial year, the direct tax collection target has been fixed in the Budget Estimates at Rs.3,70,000 crore at a growth of 9.4 per cent over the actual collection last year. “Given the likely impact on government finances due to unanticipated drought, I will like to suggest a further upward revision in the direct tax collection target to Rs.4,00,000 crore. I know what I am asking you to achieve is an extremely challenging target given the current economic situation. But it is equally true that if such a target has to be achieved, it can only be done by the Direct Tax. Tax base in India is still small and there is still substantial tax evasion or underpayment of taxes. The tax-net, therefore needs to be deepened further”, said Shri Mukherjee.
The Finance Minister said that in the last few years, the Income tax department has made significant progress in developing infrastructure. The National Computer Network of the department has become functional after data from 36 Regional Computer Centres was seamlessly migrated last year. This is a unique exercise of its kind in the world, he said.
The Finance Minister applauded the department for taking several other initiatives to improve taxpayer services, including facilities of electronic payment of taxes. Last year, nearly a sixth of the total tax returns were filed electronically, and nearly two-thirds of the gross taxes were paid electronically. A Centralised Processing Centre has become operational at Bangalore and is likely to further speed up processing of returns and issue of refunds to taxpayers. The Refund Banker Scheme functional in six cities presently ensures that taxpayers get their refunds quickly and directly into their bank accounts. Large taxpayer Units, operational in four cities, have received good response. The department is in the process of implementing the ‘Sevottam’ scheme to deliver customer-oriented services, added Shri Mukherjee.