Search the Internet          Tips  Sites: Finance, Investment

Govt to set up tax reforms panel soon

The government will soon set up a task force to undertake a comprehensive review of the country's tax structure and suggest measures to simplify procedures in a bid to boost revenues.

"The task force on reforming the tax structure would be set up in a few days," Finance Minister Jaswant Singh told a conference on small-scale industry on Wednesday.

"It has a fixed time-frame within which to present its report."

Singh had told Parliament in July that the task force will submit its report within three months.

India's tax-to-GDP ratio declined 1.9 percentage points between 1989-90 and 1999-2000 due to evasion and slack administration. Collections have rarely met targets in the past few years, widening the country's fiscal deficit.

A sharp decline in tax receipts on the back of a deep industrial slowdown in 2001-02 (April-March) led to the widening the country's fiscal deficit to 5.7 per cent of gross domestic product.

Only 25 million people pay personal income tax in India, the world's second-most populous country with a population of more than one billion. The government has launched an intensive drive to improve tax compliance and boost receipts.

India has set a target for reining in the fiscal deficit at 5.3 per cent of GDP in 2002-03.

Impressive tax collections in the first four months of the current financial year has helped keep a check on the fiscal deficit. The deficit at the end of June was Rs 39, 560 crore (Rs 395.60 billion), representing 29.2 per cent of budget estimates for 2002-03.

India's tax receipts grew 17.4 per cent year-on-year to Rs 50,232 crore (Rs 502.32 billion) in the April-July period, a senior official said on Tuesday.

But analysts said a drought afflicting the country could stifle industrial recovery, which in turn could hurt revenues in the months ahead.

ALSO READ:
More Money Headlines