Strategy in the works to collect additional Rs 92,000-cr taxes

The finance ministry has chalked out a multi-pronged strategy, including cracking down on black money holders and unlocking money held up in litigations before appellate bodies, to mop up another Rs 92,000 crore of taxes over the Budget estimate.

At a recent review meeting by finance minister Pranab Mukherjee on strengthening the tax administration to achieve the tax collection target, the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) shared the strategy to mop up extra revenues.

“Mukherjee has met senior officials of CBDT and CBEC to understand new strategies adopted for collecting extra revenues. Due to a strong emphasis by him, departmental promotions have been completed well in advance. The revamped tax administration will give further push to revenues,” said a finance ministry official.

The minister had asked the two boards last month to increase their tax collection targets by 10 per cent. The government is trying to maximise tax collections, as its fiscal situation is constrained and markets do not look promising for disinvestment.

Its optimism on tax targets comes from the first quarter net indirect collections, which were up by 23 per cent.

Gross direct tax collections were also up 32 per cent, but due to huge refunds, net receipts fell 17 per cent. In the Budget, the government had set a target to collect Rs 532,000 crore of direct taxes and Rs 392,908 crore of indirect taxes in 2011-12.

A 10 per cent increase would mean another Rs 53,000 crore from direct taxes and Rs 39,000 crore from indirect taxes. The boards told Mukherjee they would be able to collect a significant part of the additional revenue targets.

To ensure more efficiency in tax collections, the ministry has decided to trace black money, strengthen the administration of service tax by deploying more manpower, streamline procedures and legislative measures, unlock revenue locked up in appeals before tribunals, commissioner appeals, high courts and the Supreme Court, and fill up high posts in both departments by promotions.

Strict enforcement of the tax deducted at source mechanism is also a part of the ministry’s strategy to give a fillip to tax revenues. Instructions have also been issued to strengthen the tax administration by taking measures like identification of stop filers, conducting special audit and liquidation of arrears.

To expedite cases involving locked up revenue, the ministry is seeking vacation of court orders, pursuing early hearings in matters involving significant revenue, and subject-wise clubbing of cases for hearing to facilitate faster disposal. It is also avoiding further litigation in matters involving small amount of revenue and constituting a dedicated panel of counsels for defending the department in courts. About Rs 4680,000 crore is locked up in appeals at various levels.