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Indian FinMin Pledges Stable Tax Regime

by Mary Swire,, Hong Kong

31 December 2012

The Indian government is fully committed to the provision of a stable tax regime which protects the interests of both taxpayers and the tax authorities, the Finance Minister has said.

Speaking at a meeting of the Finance Ministry Consultative Committee, Shri P. Chidambaram stressed the need for systematic changes in the tax system. In particular, he emphasized the importance of improving the collection of taxpayer information, to ensure the better collection of revenue.

At present, 35m people file income tax returns, but only 1.46m declare their income as INR1m (USD18,200) and above for income tax purposes, a figure Chidambaram says is unrealistic. He believes that, with India's peak rate of taxation currently standing at a "moderate" 30%, there is a great deal of scope for better compliance and collection. He also wants to see a far larger number file their returns online, arguing that it will aid the tax processing and refund process.

The meeting was also attended by Ministers of State for Finance, the Finance and Revenue Secretaries and other senior officers of the Ministry of Finance. Attendees discussed methods for improving the relationship between authorities and taxpayers, along with efforts which can be made to ensure the correct balance between tax rates and compliance. Some members suggested widening the tax base, with the aim of bolstering revenue collections, while others recommended the opening of tax facilitation centres in rural areas. It was also noted that a series of tax awareness campaigns could be undertaken in local languages.

TAGS: compliance | tax | tax compliance | India | ministry of finance | tax authority | tax rates | tax reform | individual income tax

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