FM States that tax Collection have trebled from Rs.132771 Crore in 2004-5 to Rs.378000 Crore in 2009-10

FM Says that 8 more Income Tax overseas units will be set up soon to facilitate Seamless flow of tax related Information from Foreign Tax Jurisdiction

Following is the text of the Finance Minister, Shri Pranab Mukherjee's speech delivered after laying the foundation stone of new office building of Income Tax Department in Ahmedabad today.

"I am delighted and privileged to be in Gujarat, the land of the father of the Nation Mahatma Gandhi, for whom all men were equal and, therefore, deserved equal benefits that society has to offer. Apart from being a mass leader, he was an economist who thought for the masses and the common man. His philosophy was rooted in social reality and throughout his life he sought to integrate the socio-economically deprived into the mainstream of society. To achieve Gandhiji's vision of 'sarvodaya' and 'ram-rajya', that is overall development of all peoples and an equitable society free of exploitation, tax collection is an important instrument. In this context, the role of the Income tax Department is most critical as direct taxes are progressive in so far as taxes collected from the rich and affluent can be used for the betterment of the underprivileged and development of society at large. Direct tax administration, thus, plays the role of catalyst in social and economic engineering.

Earlier, the contribution of direct taxes to the national exchequer was lesser as compared to the contribution of indirect taxes. In a developed society, the contribution of direct taxes should be more than indirect taxes. It was the constant endeavor of successive Union Governments to bring necessary changes in fiscal and taxation policies to achieve the desired goal of increasing the share of direct taxes. I am happy to note that direct taxes have become major resource provider to the Central Government, nearly trebling from Rs.1,32,771 crore in financial year 2004-05 to about Rs.3,78,000 crore in financial year 2009-10 at an average annual rate of 24 percent, and increasing its share from 4.1 percent to 6.1 percent of the Gross Domestic Product (GDP). I would like to thank the taxpayers and the tax administration of Gujarat for their share of contribution to this achievement. The net collection in Gujarat region in financial year 2009-10 was Rs.15,240.2 crores, which was 2.6 times of the net collection made in the financial year 2005-06. This state has the record of the fastest developing economy among all states in India. Therefore, the growth potential of tax collection is also high in Gujarat and must be fully exploited.

To improve compliance further, tax laws have to be simple, stable and robust; tax rates should remain moderate; and multiplicity of tax exemptions and deductions should be gradually phased out in order to widen and deepen the tax base. Tax administration needs to be further toned up by appropriate use of technology on the one hand, and improving professional competence and responsiveness of the employees on the other. A major tax reform initiative has already been announced in the proposed 'Direct Taxes Code 2009' to simplify, rationalize and consolidate the laws and procedure, relating to direct taxes. I have directed the Human Resource Directorate of the Department to draw up plans for training in cooperation with tax training institutes for capacity building for smooth transition to the new legislative regime. I have recently announced that Advanced Mid-Career Training Programme (AMCTP) for IRS officers would be started during the current year. Similar training should be organized by the local Chief Commissioners for employees at all levels to improve the skills of its employees and to foster a sense of service to the taxpayers and the nation, to meet the challenges of switch over to the new taxation regime, meet the emerging challenges such as development of tax shelter products and use of tax havens thrown up by globalization.

We have set up two Income Tax Overseas Units (ITOUs) within Indian Missions in Singapore and Mauritius and I have approved eight more such units in USA, UK, Netherlands, Japan, Cyprus, Germany, France and UAE. These ITOUs will facilitate seamless flow of tax related information from foreign tax jurisdictions and strengthen our fight against menace of tax evasion using cross border transactions.

For any organisation to work efficiently and effectively, it is of utmost importance that it has the requisite infrastructure as well as well trained and motivated manpower. Better office ambience plays an important role in improving employee satisfaction, delivery of quality services and enhancing public perception. Reorganization of work in functional lines has led to reduction of hierarchies and a more professional environment. With employees spending a major chunk of their lives in offices, a good working environment has become critical to performance level of any organisation. The effective roll out of taxpayer friendly schemes such as Sevottam and Aayakar Sewa Kendra (ASK) would require adequate and tailor-made infrastructure. It is, therefore, necessary to make the infrastructure state-of-the art to improve the working environment and to make a visit to the tax office a pleasant experience. Worldwide, green architecture is already an imperative, and in conformity with the same, it is the Government's desire to set up green buildings. Green architecture denotes economical, energy-efficient and environment-friendly development. It involves the use of alternate sources of energy, energy-saving appliances, environment-friendly materials, water conservation, recycling, waste reduction and creating a healthy and safe environment for occupants of a building.

I am informed that the requirement of office space for the Income tax Department at Ahmedabad is 25,253 square meters. So long, the available space was only 6,000 square meters and the shortage in requirement was met by hired office space in various buildings. Some of the hired buildings were in dilapidated condition and, therefore, the tax administration was unable to improve the working conditions and provide better taxpayer services. I am happy to note that the Department has made earnest efforts in removing this shortcoming by construction of new buildings. The office building of 5,000 square meters at Ambawadi and another office building on this very ground will further provide office space of 8,571 square meters. I am happy to note that these buildings are designed in conformity with the concept of "green building". The beautiful housing complex at the adjacent plot will provide much needed accommodation to the families of 80 employees of the Department. I urge the Department in Gujarat to embark upon such project to augment its infrastructure in other cities. I would like to emphasize that in planning its infrastructure, the Department has to be forward looking, futuristic, and take into consideration the benefits to the taxpayers.

I am happy to announce that the Income Tax Welfare Fund, pending since 1998, has become operational. The Fund has a corpus of Rs.100 crore kept in interest-bearing deposit. The interest earned annually on this deposit, and other annual accruals to the Fund, will be available for welfare activities of all employees of the Income Tax department and also help in meeting their unforeseen contingencies.

I thank you for giving me an opportunity of being amongst you on this auspicious day and congratulate all of you for organising this function so efficiently."

Tax compliance strengthened through measures to curb evasion, expand overseas information units and upgrade tax administration. The Finance Minister urges strengthening tax compliance and curbing evasion so increased direct tax revenues fund social development; proposes law simplification via the Direct Taxes Code, phased removal of excessive exemptions, and moderate rates to widen the tax base; mandates expansion of overseas tax units for cross-border information exchange and anti-evasion; directs capacity building through officer training and technology use; and calls for upgraded green infrastructure and the operationalisation of an Income Tax Welfare Fund for employee welfare.