Paying over R100-cr advance tax may be asked to join LTU

The government is considering making it mandatory for companies paying advance tax of over R10 crore annually to register with the Large Taxpayers Unit (LTU), a move likely to augment and streamline tax collection.

A four-member committee has been set up to look into various aspects of LTU, a single-window clearance for all matters related to central excise, income tax/ corporate tax and service tax.

“The committee is also examining whether to make it mandatory for companies who are paying advance tax of more than R10 crore in a fiscal year or service tax of more R5 crore to register under LTU,” said a senior finance ministry official.

At present, it is voluntary for large taxpayers to register under LTU. The first LTU was set up at Bangalore in 2006 followed by Chennai, Mumbai and Delhi. As a measure of facilitation, and in line with international practices, the government announced the setting up of LTUs in 2005-06.

LTUs, as per the finance ministry, provide better service to the taxpayer, through personalised attention, quality of service and transparency in transactions. These units reduce tax compliance cost, delays and ensure uniformity in the matters of tax/duty determination.

An LTU is headed by a chief commissioner, either from the Central Board of Direct Taxes (CBDT) or the Central Board of Excise and Customs (CBEC).

The government has set a R12.35-lakh-crore total tax

Revenue target (direct and indirect taxes) for the current fiscal, up from R10.38 lakh crore estimated in the previous fiscal.

Last month, Parthasarathi Shame finance minister P Chidambaram, had hinted that at one point the government might make LTUs mandatory for eligible entities.

This Article is written by CMA Samir Biswal. He can be reached at cmasamirbiswal@gmail.com

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