Excise threshold for big taxpayers may be reworked

The revenue department may change the Rs 1-crore excise duty limit for identifying taxpayers eligible for large taxpayer units (LTUs), to be made operational early next year.

The finance ministry had proposed that all units which had paid a central excise duty of or above Rs 1 crore in 2004-05 would be among LTUs in the first phase. Officials said the industry had pointed out that the limit of Rs 1 crore was too low and that it should be hiked to at least Rs 10-20 crore.

"The suggestions are being examined by the Central Board of Direct Taxes and the Central Board of Excise and Customs and a decision would be taken soon," officials said.

"Since the government's objective is to provide incentives for large taxpayers, the limit should be increased, so that only a few large taxpayers are included in the first phase. The limit can then be reduced gradually to extend the facility of LTUs to more taxpayers," an industry representative said.

There are around 5,300 units across the country which pay excise tax of more than Rs 1 crore annually. Of these, around 3,900 units are also income or corporate tax assessees. Further, out of these 3,900 units, around 2000 units pay their corporate tax in Bangalore, Chennai, Delhi, Kolkata and Mumbai, where the LTUs are proposed to be set up in the first phase.

The industry had also suggested that the LTUs should be made optional in the first phase. The revenue department had also been suggested that additional allowances should be given to the revenue officials manning these LTUs to ensure good quality service, officials said.

"Pakistan, which has already operationalised LTUs, offers hiked salary to officials to attract the best talent," said an industry representative.

He added that the revenue department had clearly said the LTUs would cover all direct taxes and the excise and service tax in the first phase. Customs duties will not fall within the purview of the LTUs.