New Delhi, Jan 30 (PTI) Amid the growing clamour to crackdown on generation of black money, the Finance Ministry hasinstituted a study group to improve "voluntary compliance" bysuggesting appropriate measures to motivate tax evaders todisclose their unaccounted funds.
The study, which will be conducted by economic and taxexperts, is also aimed at stopping "commoditisation of taxavoidance schemes".
The latest study comes in the backdrop of FinanceMinister Pranab Mukherjee''s statement that two groups havebeen constituted to look into different aspects of blackmoney, including a proposed amnesty scheme to unearthunaccounted wealth.
As per the statement of the proposal put forward by theIncome Tax Department, "Complexity and innovation in businessstructures, new financial products, a large number oftaxpayers, growth in international trade supported by rapidexpansion of e-commerce, commoditisation of tax avoidanceschemes are some of the factors leading to increasedcompliance risk for the tax administration."
It may not be possible for the Income Tax Department toaddress these risk factors through the traditional tools basedon verification and enforcement action alone, the proposaladded.
"Tax compliance costs impose a burden on the taxpayers.
If the amount is a big percentage of the tax payable, itdeters small and medium taxpayers from being a part of the taxsystem," it said.
As such, "The challenge before the I-T Department is toascertain the extent of compliance cost for differentcategories of taxpayers and develop focused programmes toreduce the compliance costs for improving voluntarycompliance," the statement said.
"The study group will strategise to increase direct taxcollections and suggest measures to curb tax evasioneffectively in the changing business scenario, which includescurbing generation of black money," a senior Finance Ministryofficial said.
The study group, according to the official draft of theFinance Ministry, will undertake a four-pronged approach to"better understand compliance issues from the perspectiveof taxpayers".
The group will then make recommendations with respect tothe operational decision-making process on the basis of viewsexpressed by affected parties, as well as facilitateparticipation in the tax system by all segments of taxablecitizens. In addition, it will study the barriers tocompliance as an ongoing programme and the compliance costwith respect to different categories of taxpayers on aperiodic basis. .
"The Income Tax department has to pay greater attention to understanding the factors that shape taxpayers''compliance behaviour in order to craft and implement apotentially more effective set of responses.
"The challenge before the Income Tax Department is toidentify and assess compliance risks, not only domestically,but also internationally, on the basis of prioritiesidentified with the help of a sound risk management system,"the proposal said.
The department will also study the extent of revenueleakage "with clear identification of the activities and thefactors responsible for its growth", which will help the I-TDepartment optimise revenue mobilisation.