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

New Delhi: To widen the tax base, a Parliamentary panel on Thursday 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 percent 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.

Such a step will also ensure tax buoyancy in the long run, it added.