Plug loopholes to boost tax revenue: Pranab
Bangalore: Finance Minister Pranab Mukherjee Sunday advised experts to plug loopholes in the taxation laws to ensure that the government got its due share of revenue and to curb avoidance.
"In a globalised world, our officers face the challenge of unearthing tax avoidance than evasion. They have to evolve a new method of sophisticated tax planning to protect the interests of the government by realising its due share," Mukherjee said at a function here.
Admitting that globalisation had advantages as well as disadvantages, Mukherjee told tax and revenue officials that the world over sophisticated tax planning was done with the help of experts in accountancy or taxation laws to minimise tax liability of companies and individuals, which resulted in lower revenues to the government.
"Globalisation is a mixed blessing. It is inter-dependent and has inter-linkages between various tax practices and processes. It has problems because experts do tax planning in such a way that could be detrimental to raising tax revenue," Mukherjee said after inaugurating the Direct Taxes Regional Training Institute (DTRTI) of the National Academy of Direct Taxes.
Noting that about 60 percent of the tax revenue came from direct taxes, the minister said the tax base was Rs.5 trillion (Rs.5 lakh crore) in the revised estimates for fiscal 2011-12.
"We have come a long way from the independence year of 1947-48 when the tax base of the union budget was a mere Rs.116 crore as declared by then finance minister Shanmugam Chetty. In contrast, the tax base has increased substantially."
Mukherjee said the revenue and tax departments had come a long way in developing expertise and competency to increase the share of taxes in government revenues over the last four decades.
"As some one who has been associated with the finance ministry since 1974 when I was the minister of state for revenue and expenditure (as it was known then), I have been witnessing the tremendous progress its departments have been making in framing new tax laws and processes to not only increase revenues, but also bring more people in tax ambit for better compliance," the minister added.
As the training arm of the income-tax department, the DTRTI provides training in direct taxation to department personnel and the ministerial staff. The institute has trained about 60,000 officials during the last 38 years since 1973. It also provides training to other government departments, banks and corporates.
"We also offer training to tax administrators of other countries, especially from the developing world and our faculty are sought by other training institutes, law schools, banks and industry," said institute Director Jahanzeb Akhtar.