I-T Dept To Turn The Heat On Psus, Mncs

The Income Tax department is seeking to crack down on truant public sector undertakings (PSUs) and multinational companies (MNCs) as part of its efforts to boost tax collections in 2000-2001.

Chief commissioners and directors general of Income Tax (I-T) at their annual conference yesterday while deliberating on the means of maximising collection in the current year, observed that the assessment of MNCs viewed India, a "virgin territory", as a "soft country" in terms of tax compliance.

"Whenever some action is taken against them they make a lot of hue and cry and even threaten withdrawing from India and taking strong action against Indian companies in their country," a paper circulated amongst the officials said. Calling for a policy decision it was argued that "India as sovereign country should not be cowed down by such threats".

 

At the conference it was also stated that during the fiscal, the I-T department had faced difficulties in making collections from PSUs. The PSUs did not pay their dues on the premise that it would "spoil" their balance sheet or hinder cash flow.

These units very often took their grievances to the Committee of Disputes (COD), headed by secretary (co-ordination) in the Cabinet Secretariat, or their respective Ministries, Mahanagar Telephone Nigam Ltd being one such example.

The participants felt that the department should collect the taxes before finalisation of first appeal because immediately after the first appeal the PSUs could go to the COD and get a stay and even go on to the Income Tax Appellate Tribunal for further stay.

"It's time that we stop paying attention to these noises and the finance ministry should stop acting on their complaints. You can't expect the department to function this way as it creates a bad precedent and brings the bureaucracy's biases to the fore," a senior I-T official said.

"Why should we distinguish between a PSU and anyone else. Be it a public sector or a multinational we will treat them the same way. The point that needs to be brought out is that let us carry out collections the way we do and the figures will improve," another official questioned.

When contacted finance secretary Piyush Mankad played down the issue of streamlining the tax collection mechanism for MNCs and PSUs. "We are discussing a number of things and these are just a part of the discussions which we hold annually to improve the department's functioning," he said.

During 1998-99, a number of multinationals including United Airlines, British Airways, Lufthansa, MasterCard, Visa, Lucent, Nokia, Motorola and Allied Signal, to name a few, were investigated.