| The government planned to focus on increasing the tax base to generate resources for developmental needs in next year’s Budget, a finance ministry official said today. He added that the ministry was open to suggestions for further simplification of the fringe benefit tax (FBT) in Budget 2006-07.
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| “We are moving towards a less intrusive tax regime but at the same time, we have to broaden the tax base to raise resources to meet developmental needs. So, while we can rationalise our tax structure further, we must also look at ways to generate resources. If there has to be rationalisation, we have to find out how resources can be raised elsewhere,” revenue secretary K M Chandrasekhar said at a Ficci seminar.
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| Chandrasekhar said he was aware that complexities regarding the FBT was worrying people and added that the government was open to suggestions to simplify it further.
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| “The revenue that has been collected from FBT is not huge, it is just 3-4 per cent (of total tax collections). We are still open to suggestions regarding what further simplifications are possible and during the budgetary exercise we will see what we can do,” he said.
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| The government is also reviewing the weighted deduction on income tax given to research and development. “The Kelkar committee has recommended abolition of the weighted deduction and we are looking at this issue jointly with the department of science and technology,” he said.
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| He said an inter-ministerial committee had been set up to review the present structure on both the revenue and the expenditure side “The committee is examining how to create a structure suitable to ensure that expenditure is focused and targeted adequately for R&D,” he said.
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| The revenue department is from today initiating the pre-Budget discussions with the trade and industry players. Chandrasekhar said in order to widen the tax base, the revenue department was collecting information from various sources including the Annual Information Returns (AIR) scheme which had provided details on “million crores worth of transactions”.
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| “This information is available to the assessing officers and they will compare this will the returns filed. We will process this information on the basis of the PAN (Permanent Account Number),” he said.
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| He said no decision had as yet been taken on including more services under the ambit of the service tax. He said the government was hopeful of putting in place the Electronic Data Interchange system by March 2006.
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| In addition to this the revenue department was also hopeful of introducing the risk-management system for importers by March next year which would enable nearly 70 per cent of the goods imported to be cleared through a green channel. |
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