The tax department has stepped up revenue augmentation measures ahead of the Union Budget. According to sources, both wings of the revenue department — Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes & Customs (CBIC) — in separate communications, have asked field formations to “refocus efforts” on tax collections.
Sources shared that the chiefs of both the boards have asked the teams to ensure weekly updates are shared ahead of Budget discussions for revised estimates.
The sources added that some of the top priorities for the fields include — revenue augmentation in focus as the second half of FY23 begins, along with measures to enhance the tax base, especially covering new economy taxpayers, digital platforms avoiding taxes, online gaming and the cryptocurrency sector. The chiefs of the boards have also asked the focus to be on completion of pending investigations,
“The fields should consider non-intrusive, non-coercive measures to ensure taxpayers file returns, pay taxes in time, faster disposal of seized items, including precious metals and look at steps to plug loopholes, improve compliance, ensure efforts to improve taxpayers user experience for online filing, among others," the sources said.
The budget estimates set for direct tax stand at Rs 14.2 lakh crore and for indirect taxes at Rs 13. 37 lakh crore.
However, healthy cues and collections in the first half of the fiscal have made the revenue department often express confidence that they will be able to exceed the Budget targets.
“Both the Boards should focus on collecting what is due. They should avoid the easy option of stopping refund/drawback/ITC . Measures such as these do not contribute to revenue augmentation . On the contrary this causes hardship to the trade and industry and serves little purpose . The focus should continue to be on curbing evasion," says former CBIC Chairman Najib Shah
Sharing a similar sentiments, experts too feel that the Budget estimates were quite modest and the government will be able to exceed the targets set.
“Given the buoyancy we have seen on GST collections in the first half of this fiscal, the Government is likely to exceed the budget estimate by a fair margin," said Pratik Jain, a partner at PwC India.
Jain said that continuous efforts to plug the tax leakages need to be put to keep the momentum. “The key is to do it with increased use of data analytics and technology in a non-coercive manner. It’s also important that GST council quickly examines and clarifies few fundamental issues, particularly on emerging sectors such as crypto and online gaming. One of the ways to augment revenues could be to come up with some scheme of voluntary compliance and provide an opportunity to the industry to pay for past years, possibly without penal consequences,” Jain added.
Abhishek Jain, tax partner at KPMG too feels that departmental vigilance and audits are of utmost importance in the tax ecosystem of any economy, and helps ensure better compliance as well as boost government collections. “The GST field formations have been successful in identifying huge fraud cases and ensuring better compliance. A refocused approach focusing on expedited closure of cases, and non- coercive measures would be appreciated by the industry and will also help to plug remaining loopholes. The authorities will however have to ensure that ease of doing business is not hampered," he said.
Meanwhile, Saurabh Agarwal, tax partner at EY, said that the tax authorities have been relying on the technology as a backbone to augment the revenues. He said both, the CBDT and CBIC, have been using data analytics to achieve the objective of tax collection. “Many DRI and DGGI investigations have been carried out in the recent past, other than regular data-based enquiries and recoveries. Other sources which can help in augmenting revenue can be taxbility of online gaming, dispute settlement schemes and closure of GST and Income tax assessments for the past period," he said, adding that this entails the industry should be ready with the data required for completion of assessment and should do a thorough review of their tax positions in order to ensure that there is no exposure of penalty which arises on account of additional tax payments as a result of the said assessments.
“Saying so, given the festive season GST collections for October too are expected to cross Rs 1.4 lakh crore leading to increase in exchequer,” he added.
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