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FM invites big firms to file taxes

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December 28, 2005 15:22 IST

Disfavouring 'blunt' steps like search and seizures, Finance Minister P Chidambaram on Wednesday invited 582 top corporates to avail a single-window tax payment facility and promised to set up a National Tax Tribunal next year to cut disputes and improve collections.

"Taxes must be paid...I don't believe in blunt measures like search and seizures. Sometimes we have to use blunt instruments," he said flagging off the roadshow for large taxpayers unit in New Delhi.

Corporates can confirm their participation in LTUs before January 10, so that the tax departments could assess the taxes from next fiscal.

"I promise you that LTUs will be modern offices and assessment and payment will be through electronic media. Senior officials will assist you," he said.

"LTUs will give an opportunity to taxpayers and collectors to discharge obligation in a hassle-free and dispute-free manner. The cost of compliance will also come down," Chidambaram said.

The facility of filing excise, corporate tax and service tax under one roof would be "optional" for companies paying excise over Rs 5 crore (Rs 50 million) and assessed by Income tax in any of the five cities - Delhi, Mumbai, Chennai, Bangalore and Kolkata, where LTUs would be set up initially.

Chidambaram said geographical reach and eligibility criteria could be extended. Of the 582 large corporate tax payers, 145 can avail the LTU facility in Delhi, 196 in Mumbai, 101 in Kolkata, 84 in Chennai and 56 in Bangalore.

The minister said a bill for setting up a National Tax Tribunal was introduced in the winter session and is now with standing committee of finance and is expected to be taken up in the Budget session.

With LTUs and NTT, Chidambaram said disputes relating to taxation would come down significantly. "Less dispute means greater compliance."

In LTUs, he said, "The assessment must be of high quality so that disputes are less. What is the use of assessing if the demand goes into a dispute?"

Referring to the cascading impact of tax disputes, he said, "it will be stayed in the first appellate stage and part of it will be stayed in the second appellate stage. If there is less disputes there will be greater compliance."

Chidambaram, who already had an interaction with chief financial officers of India Inc, will discuss in details about tax matters including LTUs with CEOs in the run up to budget.

"If all the 582 companies opt to join the scheme, we will make a splendid beginning," he said. He said the LTUs are part of the broader objective of business process engineering in the taxation departments.

The ministry is in the process of hiring consultants for such restructuring for the Income Tax department shortly.

In fact, Chidambaram admitted that "we are not the early birds but late comers. Countries like Pakistan, Bangladesh, Sri Lanka and Nepal have already set up LTUs whereas it is a common thing in developed nations like the US, the UK and the Netherlands and Indonesia."

The Central Board of Direct Taxes and Central Board of Excise and Customs are jointly working to put in place the LTUs, which will be manned by officials from both departments.
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