Govt aims at 20% revenue mop-up growth

The government has set itself a target of a 20 per cent annual growth in revenue collections for the next three years.

The target is part of the milestones set by the revenue department in line with a directive issued by the Prime Minister's Office to all government departments.

The target was set assuming an annual economic growth of 6-7 per cent and an annual inflation rate of 4-5 per cent, government officials told Business Standard.

The government is targeting a 27 per cent growth in revenue collections during the current fiscal to Rs 233,906 crore, up from Rs 184,169 crore projected in the Budget in 2003-04.

In the mid-year review released yesterday, the government identified moderate and stable tax rates, doing away with unjustified exemptions, reducing Customs duties to Association of Southeast Asian Nations (Asean) levels and a comprehensive review of tax laws as the core area of reform.

The revenue department also intends to computerise a large part of its functioning over the next three years. In addition, improved amenities for tax payers were also planned, an official said.

Steps to improve the functioning of the department and simplification of procedures are expected in next year's Budget.

The goal is in line with the United Progressive Alliance government's Common Minimum Programme, which states that the government will initiate measures to increase the tax-GDP ratio by undertaking major tax reforms to expand the tax base, increase tax compliance and make tax administration more efficient, according to the officials.

They pointed out that several steps had already been initiated by the department to bring more people under the tax net. These include the implementation of the on-by-six scheme, compulsory quoting of the Permanent Account Number in high-value transactions, filing of the Annual Information Return under Section 285BA of the Income Tax Act in respect of certain financial transactions.

Also, surveys and searches on a selective basis, extending applicability of Tax Deducted at Source provisions to cover various financial activities and efforts to educate tax payers through camps and publicity campaigns have been initiated.