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‘FY22 tax collections historic high … next year a window to cash in on the good times’: CBDT Chairman JB Mohapatra

"The department is in a very good space right now. Unlike last year, and before that one, when we were struggling for collections. This year collections have been good thankfully and hopefully another three months will go in this manner," Central Board of Direct Taxes (CBDT) Chairman JB Mohapatra said.

JB Mohapatra (Photo Credit: CBDT)

Revenue targets for next year are not conservative and the tax department has a good window to cash in on good times, Central Board of Direct Taxes (CBDT) Chairman JB Mohapatra said. In an interview with Aanchal Magazine and Sunny Verma, he also clarified that the retrospective amendments of cess and surcharge being a part of tax are clarifying the intent of the Department. Edited excerpts:

There are many legal changes that have happened. One was about retrospectively clarifying about cess and surcharge being part of tax and the other is also on allowing the tax department to question the flows of funding for companies. This has led to some concerns.

There are some cases which are coming through with regard to the claim of cess as an expenditure. Cess was introduced in assessment year 2005-06. The department and the government believes that cess and tax, they are part and parcel of the same species, right? They are the same nature, so cess cannot be treated any differently than tax.

That’s the reason as to why you have made it effective from 2005-06.

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Effective from the date, the cess was implanted into the Act. The interpretations should be going back to that year. That’s the only reason. It’s basically because of historical reasons. Because it was introduced in a year, it should be interpreted to be effective from that year onwards. On the other part, with regard to trying to see if funding is right or not, the operating section is Section 68.

This is unexplained credit, if the amount in your books of accounts is coming from tainted sources. Then the department can ask, get satisfied, whether the funding in your books, whether it’s apparently from the right sources or illegitimate sources. Then we can make the investigation and tax it in the hands of the man who has received it.

In the case of the private companies, the provision was that in case of share capital, share premium and share application money, we can go behind the one behind that credit and we can ask the source of the source. Now, we have expanded it to say when it comes to loans, borrowings or whatever, we can have that source of source variation.

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This is required in the context that there are situations aplenty in the field where there is huge lot of layering when it comes to funding and laundering of illicit money, the nature and the source and the legitimacy of a typical lump of money cannot be answered by looking at the first source, we have to go to second to third to fourth and fifth. Because through layering, cash will be generated and will be introduced at one point and the banking channels will be routed and the cheques will be out from another source. So it’s a very difficult situation for the investigators. And there are these entry providers, those who exchange cheques for cash, those kinds of people are there. So, just to prevent the whole economy, the tax economy, also getting contaminated because of these kinds of layering tactics.

That is why the source of source verification was also needed. We thought it would be required for loans and borrowings, not just the capital and share application money.

On the retrospective thing because the government has over the years been saying that we will not follow a retrospective policy and we have seen the pullback in the other key areas which were under criticism, so will this amendment not generate fresh perception that again there is a retrospective policy from 2005?

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Let me correct this is not retrospective. I agree there is a language, which is clear from the Bill. It is worded from 2005-06. But one also has to read the context in which the retrospectivity provision has been kicked in over here.

The Department strongly feels at the time of presentation of the Bill that cess can never be part of an allowable expenditure. That’s the reason conviction in this case is unanimous. That cess can never be and could never have been allowed as an expenditure. But this is at the Bill stage. There will be a lot of discussions among people who are proficient in this area and we’ll get a considered view after the discussions are over. But this retrospectivity is very different contextually from the retrospectivity in Section 9.

How are the revenue trends? The revised estimates have been kept at a higher level than the budget estimates for the first time in the last three years. Is the buoyancy good enough?

The department is in a very good space right now. Unlike last year, and before that one, when we were struggling for collections. This year collections have been good thankfully and hopefully another three months will go in this manner. So the buoyancy has been outstanding and the numbers are very strong.
On this day, Rs 10,43,000 crore has already been collected, which is more by a distance from 2018-19, 2019-20 and 2020-21. This is a historic high for the Department. We will be reaching the revised estimate of Rs 12.5 lakh crore. We are confident that this will be the Department’s highest number in its history. It will be breaching Rs 12-lakh-crore easily and enter the plus-Rs-12-lakh-crore category.

So, for next year you think the targets are not conservative and modest.

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They absolutely are not. Next year’s target is Rs 14.20 lakh crore, which is quite a large number. But with a base of Rs 12 lakh crore plus, next year also will be as good as this year and better than this year … this is a once in a century kind of thing. So there is a good window for the Department to cash in on the good times hoping this will go on. Next year is Rs 14.2 lakh crore and next to next year is Rs 15.83 lakh crore. So the trajectory has been drawn and we are probably on track to achieving those.

First published on: 06-02-2022 at 04:00:38 am
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