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A Parliamentary panel today asked the government to make strenuous efforts for widening tax base which has not grown in tandem with increase in growth in income and wealth over the years.
The report of the Standing Committee on Finance tabled in Parliament said the Permanent Account Number (PAN) has been allotted to more than 11 crore entities, while income tax returns have been filed by only 3.5 crore.
Further, a huge gap has also been noticed between number of entities to whom Tax Deduction and Collection Account Number (TAN) has been allotted vis-a-vis number of deductors filing TDS submissions.
"The Committee therefore desire that strenuous efforts should be made by the (Revenue) Department both in terms of policy as well as enforcement action in widening the tax base, which obviously is not commensurate with the growth in income and wealth witnessed over the years," the report said.
In 2011-12, assessess in the income slab of up to Rs 5 lakh comprised of 98.38 per cent of total assesses. While above 20 lakh slab comprises of a meagre 0.38 per cent of total assesses.
The panel headed by senior BJP leader Yashwant Sinha said that situation presented before it clearly suggest income tax base in revenue terms is "rather narrow" which has adversely affected tax buoyancy.
On progressive tax policies, the report said tax policies presently being pursued are "seemingly not as progressive as they ought to be".
"The Committee would also like to urge the Department to widen the tax base in a genuine manner by adding new assesses to the base at the higher income slabs rather than plateauing it off by way of accretions at the lower income slabs, which will only increase the number of returns without commensurate revenue," it added.
While in the 2008-09, over 17.84 lakh new assesses were added, the number was only about 7.21 lakh in 2011-12.
With a view to making the tax broader as also progressive in nature, the Committee had sought information on the number of new assesses added each year and percentage of tax collected from them slab-wise for the last 5 years.
The report said that the department has not been able to provide slab-wise information on new assesses.
The committee also enquired about the feasibility of 'green tax' and suggested the Finance Ministry to explore more avenues of revenue mobilisation which would also be socially desirable.
In a populous country with scarce resources, the report said, "it is necessary that such progressive and innovative levies may be imposed not only with a view to mobilising revenue but also to foster environmentally sustainable policies".
The Ministry had informed the committee that in Budget 2013-14, excise duty on diesel run SUVs have been increased from 27% to 30%.
On revenue forgone, the committee was for a comprehensive review of exemptions resulting in revenue foregone of Rs 500 crore or more in last 10 years and a report submitted to it within one month, "explaining how it has served an economic or social purpose".
The revenue forgone (direct taxes) during 2010-11 was Rs 83,328 crore (corporate) and Rs 30,653 crore (individuals), and in 2011-12 it was Rs 81,214.3 crore (corporate) and Rs 32,230 crore (individuals).
In the financial year 2012-13, revenue foregone (direct taxes) for corporate was Rs 67,995 crore and for individuals it was Rs 45,480 crore.
In case of indirect taxes, total revenue foregone in 2011-12 was about Rs 4,32,442 crore, which increased to Rs 4,60,155 crore in the following fiscal.
