'Target non-TDS income group, cash economy to widen tax base'

To widen the tax base, a Parliamentary panel today asked the government to use its resources with "strict vigil" over non-TDS income group and which are lying above Rs 5 lakh annual income bracket.
The Standing Committee on Finance, headed by M Veerappa Moily, in its report tabled in the Lok Sabha said that in the past a number of approaches have been ideated by the government with respect to broadening of the tax base.
The report said that government strongly believe that time has come to reinvent the tax collection approach i.E to move towards the untapped or lesser tapped brackets of income which mostly comprise the unorganised sector and the cash economy.

"For this purpose, the Committee would expect the Finance Ministry to diligently use their manpower and other resources with a strict vigil over non-TDS (Tax Deduction at Source) income group and which are lying above Rs 5 lakh annual income bracket," it said.
This becomes more important in the light of the submission made by the Ministry that presently three out of four tax payers are from the sub-five lakh bracket, while tax collection from this bracket is merely around 12 per cent of the total tax collection, the report said.
The Committee are constrained to observe that on the question of tax arrears, the Department of Revenue clearly lacks a coherent vision.

The panel was for an emergent need of a two-pronged approach to tackle the menace of tax arrears - focused quantitative approach to tackle outstanding tax demands and recovering them in a time bound manner; and an enhanced qualitative approach especially at the level of Assessing Officers.

Assessing Officers need to be trained and equipped better for quality and realistic assessment, which will also correspondingly help in fixing accountability of concerned officials.
"This, the Committee hope, will help in minimising the quantum of tax arrears and also preventing/minimising further occurrence of tax arrears," the report said.
The panel also believes that maintaining a centralised data-base on actual yield of searches and surveys would help analyse and throw light on the efficacy of these operations, thereby nailing the chronic and wilful tax evaders and safeguarding the interest of honest taxpayers.

Further, the panel also found that while the revenue
foregone associated with corporate sector seemed to be increasing as a percentage of the total revenue collections, that related to the individual taxpayer, as reflected in personal income tax, was declining.
In this regard, while taking note of the Ministry's "generalised reply on the issue", the Committee reiterated their earlier recommendation for a comprehensive road map for a review of "revenue foregone" with an 'impact assessment' study, that would help in making it more effective and targeted.
In another report, the Committee said it "strongly believe" that the coverage of crop insurance for the relief of the farmers needs to be extensively scaled up and made universal, in view of the gravity and enormity of the problems confronting the farm sector and particularly considering the vagaries affecting agriculture.

"In this regard, the Committee would urge the Government to rise to the emerging challenges and work out viable crop insurance schemes, customised for each segment of farmers and their crops and ensure financial protection to the farmers including social security," the report said.
To provide insurance cover to farmers, the government has taken steps, such as allowing NGOs, RBI regulated NBFCs, primary agriculture societies, and urban cooperative banks, among others to act as agents to insurance companies in marketing the micro insurance products.
Also, it uses satellite remote sensing technology as an efficient and reliable mapping tool for yield estimation for assessment of risk and settlement of crop insurance losses.