The Hindu : Business : Computerisation to widen tax base, Chidambaram tells parliamentarians

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Wednesday, Jul 13, 2005

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Computerisation to widen tax base, Chidambaram tells parliamentarians

Special Correspondent

NEW DELHI: The Union Finance Minister, P. Chidambaram, on Tuesday said the electronic filing and processing of tax returns had made the system more transparent which, in turn, would help widen the tax base.

Addressing the members of the Parliamentary Consultative Committee attached to his Ministry, Mr. Chidambaram said the cost of tax collection was less than one per cent, in the case of both direct and indirect taxes, which is one of the lowest in the world. The Finance Minister stressed on the use of non-intrusive and non-invasive investigation and intelligence methods based on information technology to check evasion of taxes and widen the tax net, instead of relying solely on searches and seizures.

He said while the traditional methods like search and seizure had a role and a demonstration effect, their effectiveness in terms of detecting concealed income or evasion of tax was limited.

In fact, he termed them as "blunt instruments" which should be used rarely and selectively. These methods should be substituted by the intelligent use of information, he said.

Referring to the concerns of committee members over the increasing number of disputes, Mr Chidambaram said various methods were being adopted to ensure that the number of appeals filed as well as the total amount of litigation was reduced. The refund, he said, was credited in the bank accounts mentioned in the returns to avoid any delay and this facility was operational now in 12 major cities.

He assured the members that the Government was seized of the seriousness of the vulnerability of data and adequate steps had been taken and more would be taken, if necessary, to protect these from any intrusion or hacking. To the suggestion on reduction in the number of officials involved in tax collections, Mr. Chidambaram said the staff was required as the TDS (tax deduction at source) and advance tax returns had to be scrutinised and followed up.

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