Confident of a pick-up in revenue mop-up during the second half of 2012-13, Finance Minister P. Chidambaram, on Monday, assured taxpayers of a stable taxation regime, and a non-adversarial approach to achieve the direct tax collection target of Rs.5.70 lakh crore set for the fiscal.
Briefing reporters after his meeting with top officials of the Central Board of Direct Taxes (CBDT) here, Mr. Chidambaram said he had directed the chief commissioners of income-tax to adopt a friendly approach to tax collection, and convey the message down the line to all taxmen so that the element of fear among the tax-paying public about the department was removed.
Tax collection target
Mr. Chidambaram exuded confidence that even as direct tax collection was now growing at 10.50 per cent against the asking rate of 15 per cent, a pick-up later during the year would help in mopping up the budgeted target of Rs.5.70 lakh crore. “We will be able to achieve the target ... I think in the second half of the year, the busy season, we should be able to achieve the target even after factoring the additional refund that has to be given,” he said.
Stressing on the need for widening the tax base and improving the tax-to-GDP ratio to 12 per cent from the level of 10.1 per cent in 2011-12 so as to improve government finances, Mr. Chidambaram pointed out that while the corporate tax rate was 30 per cent, the effective rate averaged 24 per cent owing to expenditures, exemptions and carve-outs and several sectors were paying just 10-22 per cent tax.
“Therefore, the correct way ... is to look at the sectors which are well below the average, then look at sectors which are closer to the average to see whether the average can be raised. Even if the average is raised from 24 per cent to 26 per cent, we will collect roughly Rs.30,000 crore,” he said.
To a query on the Shome Committee’s draft report recommendations on abolishing capital gains tax on transfer of listed securities and levying a higher STT (Securities Transaction Tax) to make up for the loss of revenue, if necessary, Mr. Chidambaram said: “Those who administer taxes have to study it first and then tell me what are the upside and downside of the recommendations, then I will make up my mind.”
As to whether a decision on this would have to wait till the next Budget, Mr. Chidambaram indicated that it would be after the final report was submitted by the Shome panel by the end of this month.