FinMin to make LTU registration mandatory for large taxpayers

Large taxpayers for both direct and indirect taxes may have to mandatorily file their returns

Large taxpayers for both direct and indirect taxes may have to mandatorily file their returns with the single-window clearance point set up by the government earlier.

The finance ministry is exploring the option of making it mandatory for tax payers above a certain threshold to approach Large Taxpayer Units LTUs for all tax matters including filing returns,interacting with senior officials,or disputes settlement. The move is aimed at reviving LTUs,which have not been as successful as envisaged.

LTUs were set up in 2006 by then finance minister P Chidambaram as a single point for large taxpayers to reduce compliance cost and delays,and bring uniformity in matters of tax or duty determination.

The facility is optional for assesses who pay excise or service tax of over Rs 5 crore or income tax of over Rs 10 crore. To revive interest,the finance ministry had earlier set up a committee comprising senior officials from the central board of direct taxes CBDT and central board for excise and customs CBEC,to look into the issues plaguing the LTUs.

The committee has recommended that while the LTUs should be independent budgetary authorities,it should be made mandatory for taxpayers above a certain threshold to approach them for all tax-related matters.

Currently there are four functional LTUs: Bangalore,Chennai,Mumbai and Delhi,and it is proposed to open one in Kolkata. Interest among taxpayers in registering with LTUs has waned. Since inception,only 56 taxpayers have registered with the Bangalore unit,and only 39 taxpayers with the Mumbai unit.

An industry source said,that LTUs have become a non-starter as changing jurisdiction and going to the LTUs was too much of a hassle for some companies. In a case where a company has several units and there is lack of uniformity,it is advantageous to have one point of contact in the department. In many cases,companies have found it convenient to continue with their point of contact locally as they feel they may not get the same facility elsewhere.

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A former board official said,that most firms dont want their excise,customs and income tax matters dealt at the same place because of better coordination between the two tax departments. Also,in many cases,tax officials dont want big taxpayers to go to other jurisdiction because of their own tax targets. If large cases should go to LTUs,it becomes difficult for them to meet their targets.