Union Finance Minister P Chidambaram Monday said the first of the five initially proposed Large Taxpayer Units (LTUs) was expected to be operational from July 1 and the remaining four by the end of this year.

Addressing a seminar on "Formation of Large Taxpayer Units in India", Chidambaram said the first unit would hopefully start functioning from July 1, adding, he would like to see all of them in place by the year-end.

The government had earlier announced a proposal to set up LTUs which would act as a single window facilitation centre for all large entities paying excise duty, corporate tax/income tax and service tax, initially in the cities of Bangalore, Chennai, Delhi, Kolkata and Mumbai.

He, however, did not say where the first LTU would start functioning.

Quoting preliminary figures, Chidambaram said the potential number of tax payers to be served by the LTUs in these five cities is about 843, including 96 in Bangalore.

Chidambaram said it was not mandatory for the large taxpayers to be served by LTUs.

Making a strong pitch for large taxpayers to get served by the LTUs, he urged them to give it a "fair trial."

"We promise you a modern, efficient tax-payer friendly environment and office using most modern technology. You will have a relationship tax executive who will help you" in tax-related matters, he said.

Chidambaram said India "are laggards" in some sense in introducing LTUs, noting that as many as 13 countries in Asia, including Pakistan, Sri Lanka, Bangladesh and Nepal, had launched such a service.

LTUs have been found to reduce compliance and transaction cost of tax payers and increase efficiency in tax administration, according to him.

He said the Revenue department wants to collect taxes from large taxpayer units "something akin to bee drawing honey from a flower without hurting the flower" -- collecting taxes without hurting their businesses or their professions.