The government may not be able to achieve one of its most ambitious tax targets this year — that of widening the income tax base by bringing one crore new payers under the tax net this fiscal, according to senior officials of the income tax (IT) department. Since the launch of the tax widening initiative in May, the IT department has been able to bring only close to 28 lakh new tax payers under its ambit, sources said.
For instance, till January 23 Mumbai has added only 1.7 lakh new tax payers of the total target of 6.23 lakh assigned to the income tax department in the city this fiscal. Mumbai contributes over 34 per cent of the nation’s total tax collections. Till October 2015, Gujarat had added around 2.28 lakh new taxpayers against a target of 7.86 lakh.
Currently, the taxpayers’ base in the country is about 4 per cent of the total population. Owing to the low tax base in the country the government has told the Central Board of Direct Taxes (CBDT) to take up the tax widening project on a “mission mode”.
Tax officials feel that metropolitan cities such as Mumbai, Delhi, Chennai do not have much scope of increasing the number of tax payers. According to them, most of the population is already covered by the tax net. Besides, the tax department so far has mostly added only small assessees who were earlier in the list of non-filers, said a senior I-T officer who did not want to be named.
“We have not seen much growth in new tax payers in the individual businesses segment and that is the area we need to tap. It is not going to be easy,” said another IT official.
In December, Parliament’s standing committee on finance also told the government to use its resources with “strict vigil” over non-tax deducted at source (TDS) income group and those above Rs 5 lakh annual income bracket in order to widen the tax base. This after the committee found that three out of four tax payers in India are from the sub-five lakh bracket, while tax collection from this bracket is merely around 12 per cent of the total tax collection.
According to the finance ministry, during the year 2013, 2014 and 2015 (up to March 31, 2015), the tax authority has identified 12.9 lakh, 22.09 lakh and 44.09 lakh non-filers of tax return respectively, through its Non-filer Monitoring System (NMS). As a result of the exercise, 30,68,662 new returns were filed and additional tax of Rs. 4733.61 crore was collected in the year 2013, 2014 and up to March 31, 2015.