Better tax compliance due to reduction in tax rate: Modi

Patna, Mar 30 (UNI) Deputy Chief Minister Sushil Kumar Modi today said the state witnessed a better tax compliance following reduction in the tax rate.

Replying to a special debate on 'Commercial Tax Collection: Problems and Remedies' in the state Legislative Council, Mr Modi said the state government had reduced tax rates to bring it at par with other neighbouring states like Jharkhand and West Bengal. He said higher tax rates compared to other neighbouring states also led to loss of revenue to the state.

Mr Modi said as per general policy of taxation, the tax rates should never be higher than other neighbouring states as it encouraged the businessmen to evade tax.

He informed the house that the state government had reduced tax rates on 28 commodities and steps would be taken to lower tax rates on more than 100 other commodities during the next 10 days.

The Minister said Rs 2230 crore had been collected till March 28, which was more than 95 per cent of the target fixed for 2005-06.

He said there were only 40,000 registered businessmen paying tax till April 1, 2004. With the government initiative, number of registered tax paying businessmen increased to 65000 during the last two years.

Mr Modi said that state goverment had revised the tax rate slabs and simplified it in only four slabs of 0, 4, 12.5, and 20 per cent instead of earlier different tax rates creating a lot of confusion.

''Tax on petroleum product contributes 45 per cent of total tax collection,'' he added.

Deputy Chief Minister, who is also the Finance Minister, said tax collection in undivided Bihar was Rs 1500 crore while it increased to Rs 2300 crore during last four years due to better tax management steps taken by the state government.

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