‘Direct tax target for FY22 realistic’
“INCREASING USE OF TECHNOLOGY, DATA ANALYTICS, TAXPAYERS’ COMPLIANCE BEHAVIOUR WILL COALESCE AND LEAD TO BETTER COLLECTIONS”
Central Board of Direct Taxes (CBDT) Chairman P C MODY exudes confidence of having achieved 21.6 per cent growth in direct tax revenue in 2021-22 (FY22) on the back of increased use of technology and data analytics by the department. In conversation with Dilasha Seth and Indivjal Dhasmana, he says although income-tax (I-T) slabs have been left untouched, more money is being put in the hands of taxpayers by way of quicker refunds. Besides, the tax administration reforms will provide an enabling environment to increase tax compliance. Edited excerpts:
There are varied interpretations being given to the Budget proposal to amend ‘liable to tax’ provisions. What was the intent behind the proposal? Who will it affect?
The concept of ‘liable to tax’ is particularly relevant to non-residents. If my income goes above a threshold, I have to pay tax. Subsequently I may get tax exemption due to provisions in tax treaties. We are saying the person is liable to tax but he has been exempt now. The amendment is clarificatory in nature.
What was the idea behind taxing provident fund, which is essentially a safety net for individuals?
We have not touched the taxpaying majority. Up to ~2.5 lakh is exempt. What is the percentage of the taxpaying population falling in this bracket? Very minuscule.
Despite being realistic with the revenue collection target for the current fiscal year, 21.5-per cent growth in direct tax mop-up in FY22 seems ambitious.
On the contrary, I think the projections made are far more realistic than they were earlier. We are not being ambitious. For an exception fiscal year, there was a case for the target being where it has been fixed. Next year is not going to be the same and economic activity is likely to grow at a faster clip. Increasing use of technology, data analytics, taxpayers’ compliance behaviour will coalesce and lead to better collections.
What is the direct tax collection as on February 1?
So far, the collection is somewhere around ~6.64 trillion. We need to achieve a target of ~9.04 trillion. It will not be very difficult, given the last quarter contributes a substantial chunk to the overall collection target.
Personal I-T collection target estimated for 2020-21 and FY22 is higher than the corporation tax collection. Can we attribute this only to corporation tax reduction? Absolutely. The corporation tax rates have been slashed substantially, impacting collections. We will get compensated by way of higher economic activity over a period of time.
The participation rate in Vivad se Vishwas (VSV) — further extended to February 28 — has been dismal. How much does the CBDT expect to reap from VSV?
So far, we have received 118,000 forms to settle 132,000 disputes — almost 23-24 per cent of total disputes. The tax amount is to the tune of ~95,000 crore.