For enforcement and collection of revenue through the tax deducted at source (TDS) route.
Income tax looks to outsource substantial chunks of non-core functions, it is making a pitch for a staff crunch, estimated at nearly 22,000 personnel, to step up enforcement and collection of revenue through the tax deducted at source (TDS) route.
In fact, TDS, which accounts for nearly 37% of the government's direct tax collection, is going to figure prominently in the two day brainstorming involving chief commissioners and director generals of income tax. Like every year, the focus areas for TDS are going to be flagged at the meeting, which will be inaugurated by finance minister. The other big issue is dealing with TDS mismatches and processing of returns.
In several transactions, especially where payments are made to contractors and individuals, the government uses TDS to collect taxes. This is done not only to make the process simpler but also helps it generate information on potential tax payers, who could have escaped the net. Officials said that going forward, the share of TDS in overall collections may increase further and therefore more resources, in terms of manpower, would be deployed. But that is only possible if the approach changes from scrutiny-focused to enforcement driven.
With return processing out of the way, the department would be able to focus more on these areas. In fact, further improvements to process, which has speeded up refund payments, are also on the agenda for the annual meeting of senior tax department officials.
They said that as the eight income tax overseas units become operational and there is more exchange of information, the mechanism would only improve. The government has also set up a criminal investigation directorate to focus on tracking individuals such as Hasan Ali, accused of evading Rs 72,000 crore in taxes, as well as funds stashed away in overseas banks, such as those in Liechtenstein.