Tax payers above a certain threshold limit may be asked to mandatorily use only the Large Taxpayers' Unit (LTU) for direct and indirect tax matters. The Finance Ministry is examining a proposal in this regard.
Such a move aims at helping large tax payers and also the Revenue Department to collect tax more effectively.
Such units act as single window facilitation centre for all large entities paying excise duty, corporate tax/ income tax and service tax. Here large entity means any taxpayer who is currently assessed to Income Tax/Corporate Income Tax in any of the four metros where LTUs are operational.
At present, LTUs are operational in Delhi, Mumbai, Bangalore and Chennai, while the Budget has announced opening up of a fifth one in Kolkata shortly. Currently, an assessee who has paid during the financial year 2004-05 or in the previous financial year, excise duty in cash of Rs 5 crore or more, or service tax in cash of Rs 5 crore or more or advance tax of Rs 10 crore or more is eligible for the scheme. However, it is an optional. Customs duty is not a part of this scheme.
“The Finance Ministry has obtained experts’ views and after discussion with both the boards (Central Board of Direct Taxes or CBDT and Central Board of Excise and Custom or CBEC), a final decision will be taken shortly,” a Senior Revenue Department Official told Business Line .
Last year in October, Finance Minister P. Chidambaram had called for a review and strengthening of LTUs, and the Revenue Secretary discussed the issue with two the boards.
However, it appears the matter could be taken forward due to two reasons. First was preparation of the Budget and second, cadre review.
Glitches remain
Meanwhile, another Revenue Department official admitted that these LTUs are facing lot of problems. On one hand, these LTUs are managed by an official of Chief Commissioner rank but only as an additional charge, while on the other hand, there seems to be a lack of operational co-ordination between the two wings within LTU particularly in Mumbai and Delhi and absence of institutional mechanism for sharing of information.
“An important issue is verification of compliance. In fact, during the last four years, there has barely been audit of the return which poses significant risk to revenue,” the officials said while adding that there is also a problem of adequate manpower.
At the end of 2011-12, there were 174 entities with these LTUs accounting for 14 per cent of the total direct tax and 11 per cent of indirect tax (excluding customs duty) revenues. Bangalore and Chennai LTUs are under administrative control of CBEC while those in Delhi and Mumbai are under the CBDT.
Shishir.Sinha@thehindu.co.in