The Hindu Business Line : More workload for taxman

THE Finance Minister, Mr P. Chidambaram, has pleased the vast body of taxpayers by raising the exemption limit and revising the tax slabs. True to the promise he made last year, the Finance Minister has now come up with radical proposals raising the basic exemption limit.

The Finance Minister has said that 1.4-crore assessees will benefit by the hike in the exemption limit. But will this affect the efforts at widening the tax net? After all, the number of tax returns being filed has not exceed three crore in a country with a population of 100 crore.

Care has been taken to see that the tax-widening efforts are not hit.

To expand the tax base, it is now provided that all partnership firms should, like companies, file their returns irrespective of their income levels.

Adverting to the impact of raising the exemption limit, the Kelkar Task Force has shown with extensive data that raising the limit does not result in the number of taxpayers falling. This is because of the increased incomes of taxpayers.

The proposed cash transaction tax in the newly introduced chapter VII of the Income-Tax Act requires vigilance on the part of both banks and tax officials and coordination among them. The transactions include drafts and cheques too.

The introduction of the fringe benefit tax will also add to the Department's workload. The online tax accounting system (OLTAS) is not yet stabilised and the requirement about TDS certificates is not wholly given up.

Reduction in corporate tax rate is accompanied by a cut in depreciation rates and this could have been followed up with abolition of MAT. Under the new regime, there may not be any need for MAT.

The direct tax administration would have to tackle problems at macro level. The FM, true to his wont, has chosen to address these problems with micro solutions.

(The author is former Chief Commissioner of Income-tax.)

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