The Union Finance Minister, Shri P. Chidambaram complimented the Chief Commissioners of Income Tax for the remarkable performance of the department, particularly on the revenue side. Addressing them on a live video conference here today, the Finance Minister stated that the department had done well in collecting higher revenues in 2006-07 and was performing even better in 2007-08. Total direct tax collections were up 42.8 percent as in December 2007, while collection of personal income tax was even higher.

Outlining the factors responsible for the unprecedented growth in revenue collection such as moderate tax rates, change in taxpayer behaviour towards better compliance with tax laws and a technology driven tax department which had become more taxpayer friendly, the Finance Minister observed that while the tax collection mechanism has become more technology driven, non-discriminatory and transparent, the department needed to become more friendly towards the bulk of taxpayers who were voluntarily complying with the tax laws and tough on the miniscule minority of recalcitrant taxpayers.

Shri Chidambaram said that he had sanctioned an incentive of Rs.195 crore to enable the department to improve infrastructure for increasing its operational efficiency by providing more vehicles and telephones but the department needed to further improve basic facilities for taxpayers such as potable water and clean toilets. The Finance Minister said that the department would need to find still better ways and means to utilize these amounts for a lasting impact on its functioning.

Tax administration friendliness urged-enhance taxpayer services while focusing enforcement on the non compliant minority and using technology to improve efficiency. The Finance Minister directed the income tax department to adopt a dual approach: be more taxpayer friendly toward the large majority who comply voluntarily while remaining tough on the small minority of recalcitrant taxpayers. He stressed a technology driven, non discriminatory and transparent collection mechanism and authorised incentive funding to improve infrastructure, operational efficiency and basic taxpayer amenities such as potable water and clean toilets.