New tax paying units to aid 2,000 firms

The proposed Large Taxpayer Unit, being set up by the revenue department, would initially benefit around 2,000 companies across the country as the government proposes to limit the jurisdiction of LTUs to only those having offices in Mumbai, Bangalore, Delhi, Kolkata or Chennai.

In a presentation to the industry associations last week, the ministry said the LTUs would initially cover major assesses, paying a central excise of Rs 1 crore (Rs 10 million) and above and whose corporate offices are located in the same city. These would be later extended to Ahmedabad, Coimbatore, Hyderabad, Kanpur and Pune.

There are estimated to be around 5,300 units across the country, which pay excise of more than Rs 1 crore annually. Of these, around 3,900 units are also income or corporate tax assesses. Further, within these 3,900 units around, 2,000 units pay their corporate tax in the five selected cities.

The Revenue Department has sought inputs from the industry associations Assocham, FICCI, CII and PHDCCI on the proposed LTUs. The department pointed out that according to a study conducted by it, the LTUs have been working successfully in many countries in the Asia Pacific region including Sri Lanka, Bangladesh, Nepal, Cambodia, Australia etc.

The LTUs, which would provide a single window for income tax, corporation tax, central excise and service tax, would undertake scrutiny of returns, post-scrutiny follow-up, adjudication, refunds and appeals.

Officials pointed out that in the first phase, the LTUs would provide the facility of undertaking a single excise assessment for a company irrespective of where all its production units are located.

Department officials said the format of the LTUs would be finalised by December end and the LTUs were expected to be operational before the end of the current financial year.

Representatives of the chambers were keen to know if the LTUs would undertake a single assessment of excise, service and corporate tax for a single company or whether different assessment would be undertaken for each tax.

The department clarified that in the initial phase the assessment for each tax would be different.

Tax breather

LTUs will initially cover firms paying a central excise of Rs 1 crore and above, with corporate offices in the same city

There are estimated to be around 5,300 units, which pay excise of more than Rs 1 crore annually

Of the above, around 3,900 units are also income or corporate tax assesses

In addition, within these 3,900 units, 2,000 units pay their corporate tax in the five selected cities