PM wants 'RAPID' widening of direct tax base

17 June 2016

Seeking accelerated widening of India's direct tax base, Prime Minister Narendra Modi on Thursday said India's tax base should increase to 10 crore taxpayers from the current 5.3 crore.

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, revenue secretary Hasmukh Adhia said, ''There are a total of 25 crore households in the country, out of which 10 crore have non-agricultural income. The prime minister called for the expansion of the tax net to 10 crore.''

Adhia, however, did not give any timeline to reach the 10 crore tax payers base.

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 coined the term RAPID - revenue, accountability, probity, 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, while 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 per cent of the revenue comes from scrutiny of returns, he said.

As much as 92 per cent of direct tax revenue comes from tax deducted at source (TDS) of mostly salaried people, advance taxes and self assessment taxes.

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 whether Modi wanted officers to be law enforcement agency or taxpayer-friendly, Jayant Sinha said one 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.

'Indians are honest'
"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.

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 the remaining 10 crore should come under the tax net.

He said 90 per cent of 5.43 crore taxpayers e-file their returns and 60 per cent of the refunds are issued within 30 days.

Explaining the five pillars of tax administration RAPID, Adhia said it means the revenue collection with accountability and probity, and then using the information available for non- intrusive tax assessment and collection and using digitation to record them.

"We will work in such a manner that we use the information available as well as put to use the digitisation to achieve our goal of increasing tax,'' he said.

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