Indian tax structures one of the cosiest in world:P Shome

Kolkata, Apr 21 (UNI) Describing Indian tax structure as one of the most simplified in the world,Advisor to the Union Finance minister Parthasarathi Shome has underscored the need for its further rationalisation for generating higher revenues.

Participating in an interactive session with members of the city's premier Bengal National Chamber of Commerce and Industry (BNCCI)here today, Dr Shome said since the process of simplification of both direct and interest tax structures was initiated in early 1990s,the collection of tax revenues was increased by around point five per cent from 9.4 per cent in 1996-97 to a little over 9.8 per cent in 2004-05.

However,despite the prevalance of high tax rates, collection of revenues during 1990-91 was around 10.1 per cent,Dr Shome informed but said this was possible in spite of much lesser number of people paying taxes at that time.

But elaborating the rationale behind broadbasing the tax collection efforts and the overall mechanism, he said the fruits of the simplification and rationalisation processes had already started paying back with the revenue collection chart showing a steady upward trend since 2000-01.

Referring to the rationalisation of the personal income tax structures which had already started paying rich dividend, Dr Shome claimed that its growth charge was even faster than expected and was even higher than the simultaneous rate of inflation.

This was possible as a large number of people from various other emerging sectors had been brought under the tax net with limited burden,Dr Shome emphasised and said efforts were on to bring in more people under the direct tax net to improve the revenue generation.

He said under the present condition Indian tax collection method could be termed as "one of the most cosiest affairs in the entire global economy", with the rate of collection growing by over 52 per cent during the past few years.

About the corporate tax structutres,Dr Shome was also of the view that it was one of the lowest in the world because of its continuous rationalisation since the globalisation of the Indian economy way back in 1994.

Elaborating the rationale behind excluding medical practitioners and lawyers from the purview of tax collection along with agricultural community,Dr Shome citing examples even in some developing countries, said they had given up hopes because of huge complications in determining their income."However,our efforts are on to bring them within the tax paying community." But in case of agriculturists,he said,it was found that in many cases they were in subsistence level and unable to pay taxes having low to very low of actual income.

Regarding complications in the Fringe Benefit Taxes(FBT)and the Value Added Taxes(VAT),Dr Shome said steps were being intitiated to simplify their overall structutres so that the people complied with them.

He also dealt on the government proposal on imposing value added taxes of goods and services from 2010 and assured the members that it would not put any additional burden on the general tax paying public.

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