Direct tax collections increased 10.5 per cent to around Rs 3 lakh crore in
April-September, the first six months of the financial year. In the same period last year, collections totalled Rs 2.72 lakh crore. The finance ministry has fixed the direct tax collection target at Rs 6.5 lakh crore for 2013-14, expecting a 19 per cent increase over 2012-13.
There is a fear that the collection target might not be met. Among other reasons is no reduction in the number of non-filers and evaders, especially when it comes to filing wealth tax. Experts say only three per cent individuals pay taxes. Of this number, the government earns more than half from those earning Rs 20-25 lakh or more, annually. Officially, there are only 42,800 individuals in the department's records who have declared taxable income of over Rs 1 crore.
To meet the target and get more individuals under the tax net, the government has been active over the past year. It recently sent 'polite' letters to some 40,000 individuals, asking whether they had filed returns.
The government is also looking at other ways. "The ministry is planning multiple steps to widen the net for direct tax collection, one of which is giving a status symbol to filers. The idea is to make them feel proud and be looked up to, for having filed returns on time," said an I-T official, who did not wish to be named.
This was tried earlier, too. For instance, declaring advance taxes filed by businesses, companies, film stars and so on. Many of them were felicitated for paying high amounts as tax. Both central and state governments felicitate individuals. In 2010-11, the Tamil Nadu government felicitated Lakshmi Narayanan, vice-chairman, Cognizant Technology Solutions, as the highest individual taxpayer. Shriram Transport was declared the highest taxpayer in the corporate sector.
Then, there was a Voluntary Disclosure of Income Scheme (VDIS) launched by the Central Board of Direct Taxes (CBDT) in June 1997. VDIS provided defaulters an opportunity to disclose income at the prevailing tax rates, with immunity from prosecution under major economic offences laws. - Foreign Exchange Regulation Act, the I-T Act, Wealth Tax Act and Companies Act. The scheme closed in December 1997.
VDIS was expected to get an exceptional response. It did get a fair share but did not succeed the way it was meant to. "VDIS made an impression that individuals could escape paying taxes today and come out clean without any penalty when the government would again come back with such a scheme. The aim was something else," explains Ashvin Parekh, managing partner, APAS LLP and senior expert advisor, global financial services, EY. Many individuals waited for such a scheme in the coming years and sat back to save on interest penalty.
There is a fear that the collection target might not be met. Among other reasons is no reduction in the number of non-filers and evaders, especially when it comes to filing wealth tax. Experts say only three per cent individuals pay taxes. Of this number, the government earns more than half from those earning Rs 20-25 lakh or more, annually. Officially, there are only 42,800 individuals in the department's records who have declared taxable income of over Rs 1 crore.
To meet the target and get more individuals under the tax net, the government has been active over the past year. It recently sent 'polite' letters to some 40,000 individuals, asking whether they had filed returns.
The government is also looking at other ways. "The ministry is planning multiple steps to widen the net for direct tax collection, one of which is giving a status symbol to filers. The idea is to make them feel proud and be looked up to, for having filed returns on time," said an I-T official, who did not wish to be named.
This was tried earlier, too. For instance, declaring advance taxes filed by businesses, companies, film stars and so on. Many of them were felicitated for paying high amounts as tax. Both central and state governments felicitate individuals. In 2010-11, the Tamil Nadu government felicitated Lakshmi Narayanan, vice-chairman, Cognizant Technology Solutions, as the highest individual taxpayer. Shriram Transport was declared the highest taxpayer in the corporate sector.
Then, there was a Voluntary Disclosure of Income Scheme (VDIS) launched by the Central Board of Direct Taxes (CBDT) in June 1997. VDIS provided defaulters an opportunity to disclose income at the prevailing tax rates, with immunity from prosecution under major economic offences laws. - Foreign Exchange Regulation Act, the I-T Act, Wealth Tax Act and Companies Act. The scheme closed in December 1997.
VDIS was expected to get an exceptional response. It did get a fair share but did not succeed the way it was meant to. "VDIS made an impression that individuals could escape paying taxes today and come out clean without any penalty when the government would again come back with such a scheme. The aim was something else," explains Ashvin Parekh, managing partner, APAS LLP and senior expert advisor, global financial services, EY. Many individuals waited for such a scheme in the coming years and sat back to save on interest penalty.
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This Article is written by CMA Samir Biswal. He can be
reached at cmasamirbiswal@gmail.com
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