In a move aimed at accelerating the country’s revenue base, Prime Minister Narendra Modi on Thursday said India’s tax base should increase to 10 crore from the current 5.3 crore.
“There are a total of 25 crore households in the country, out of which 10 crore have non-agricultural income. The prime minister, in his address, called for the expansion of the tax net to 10 crore,” said Revenue Secretary Hasmukh Adhia.
Adhia, however, did not give any timeline to reach the 10 crore tax payers base.
Adhia was briefing the media after an address by Modi at the two-day conference of top officials with the Central Board of Direct Taxes and the Central Board of Excise and Customs.
The prime minister also asked the taxmen to remove the fear of harassment in the minds of the people and emphasised that their behaviour should be “soft and sober”, Minister of State for Finance Jayant Sinha said while briefing reporters about the meeting.
Modi also termed RAPID — revenue, accountability, pribity, information and digitisation – for accelerating the tax base net.
At the conference titled ‘Rajasva Gyan Sangam’ (Knowledge Conference on Revenue), Modi asked the officials to “move towards digitisation” to make tax administration efficient and work towards bridging the “trust deficit”.
Highlighting shortcomings in the system, Modi said a query on search engine Google on ‘How to pay taxes in India’ throws up 7 crore answers, but a query on ‘How not to pay taxes in India’ gives out 12 crore results.
The Income Tax Department has 42,000 officers, yet only 8% of the revenue come from scrutiny of returns, he said.
As much as 92% of direct tax revenue come from tax deducted at source (TDS) of mostly salaried people, advance taxes and self assessment taxes.
Prodded by Modi during an hour-long interaction, officers of the direct and indirect taxes wing (CBDT and CBEC) asked if they should act as law enforcement agencies or taxpayer friendly departments while collecting due taxes from people.
Another suggestion was to bring a “tax facilitation act” that would frame rules for dealing with tax payers. The rules should also be in regional languages.
Asked on whether Modi wanted officers to be law enforcement agency or tax payer friendly, Minister of State for Finance Jayant Sinha said we need not necessarily think about it in terms of a trade off between Enforcement and taxpayers services.
“If you trust the taxpayer, if you build that bridge of trust between the taxpayer and the system… because people of India are inherently honest, then we will find it very easy to be able to achieve the target and ensure that the trust deficit is fully bridged,” Sinha told reporters.
“People within the country are not dishonest. People have no problem in paying taxes, but somewhere they have some problem. Understand that problem and try to remove it,” Modi told the taxmen.
Adhia said Prime Minister stressed on being cooperative when dealing with people. “If you become taxpayer friendly, then taxes will automatically come to you.” Addressing the officers, Finance Minister Arun Jaitley suggested the departments should move towards digitisation.
When asked if achieving tax base of 10 crore is an aspirational target, Sinha said: “What we have to do is to continue to increase the tax base in the country, to continue to move the tax to GDP ratio upwards.”
CBDT Chairman Atulesh Jindal said the department will take steps to bridge the trust deficit with taxpayers.
Sinha said of 25 crore households in the country, 15 crore are agriculturalists and hence the remaining 10 crore should come under the tax net.