Press Information
Bureau
Government of India
Ministry of Finance
04-June-2012 13:25 IST
~FM asks CBEC Officials to Make their best
Efforts to Mobilise Resources to meet the Targets of Indirect Tax Collections
for 2012-13~
Following is the text of the Speech delivered by the
Union Finance Minister, Shri Pranab Mukherjee at the Annual Conference of Chief
Commissioners and Directors General of Customs, Central Excise and Service Tax
here today:-
“I am
very happy to be here at this Annual Conference of Chief Commissioners and
Director Generals of Central Board of Excise and Customs (CBEC). Let me begin
by congratulating the officers and staff of the Department for your spirited
performance in tax collections in the year 2011-12. Despite a slowdown in
growth and the duty cuts effected on petroleum products in June 2011, the
indirect tax collection of Rs. 3,92,781 crore (excluding cess) is only
marginally short of the Revised Estimates of Rs. 3,94,000 crore in 2011-12.
2. The
target for indirect tax collections in 2012-13 has been placed at Rs.4,99,694
crore. It is a growth of over 27 per cent. This target has been fixed keeping
in view the increase in central excise and service rate from 10 to 12 per cent
the observed buoyancy in service tax collections. I am confident that the
department would leave no stone unturned in ensuring that the targets for the
current year are not only met but handsomely exceeded.
3. A
strong indirect tax administration is fundamental to the development of a
nation’s economy. Government’s fiscal measure, by way of reduced rates of
excise and customs duties, significantly dented revenue collections in the
recent past. It was an unavoidable necessity to steer the economy out of the
economic slowdown. The Indian economy registered a healthy growth of 8.4 per
cent in 2009-10 and 2010-11. However, renewed global uncertainty, emanating
mostly from the Euro zone area affected domestic business sentiments in
2011-12. A tight monetary policy directed at taming inflationary pressures in
the economy also came in the way of consolidating this recovery. GDP growth in
2011-12 has slowed significantly to just 6.5 per cent. This has been disappointing.
Like for most parts of the world, the second round of global uncertainty and
the slowdown has come rather quickly on the heels of the previous one, with
practically no headroom for running a proactive fiscal policy.
4.
Nevertheless, there are some positives for the Indian economy as we look
forward. The interest rate cycle has been reversed; mining sector growth has
turned around, progress has been made on fuel linkage for coal based power
projects; there is a turnaround in the quarterly investment growth rate, which
had been negative in the preceding quarters of 2011-12; a normal south west
monsoon has been predicted for 2012-13 and there has been a rapid decline in
international oil prices in recent weeks. Further, there are no major adverse
results on corporate performance in the last quarter of 2011-12. All these
factors should help in the recovery of domestic growth momentum.
5. The
challenges before your department today are multi-faceted. At a general level,
there is an urgent need to reverse the declining trend in tax- GDP ratio by
augmenting tax collections. This ratio was nearly 12 per cent in 2007-08 but
has dropped to around10.5 per cent in 2011-12. There is scope for improving tax
administration by leveraging technology and facilitating a congenial public
interface, where required, through appropriate training and capacity building.
6. The
ever increasing demands from trade and industry for faster clearance of
import-export cargo, prompt payment of refunds and drawback claims, timely
resolution of difficulties faced by the taxpayers etc. has to be balanced with
the need for improved tax revenue mobilization. The important task before you
is to ensure timely collection of all legitimate tax dues, without, of course,
unduly burdening the assessee. You must sharpen your audit skills and conduct
intelligent scrutiny of assessees’ records to bring to the kitty any tax that
might have escaped assessment and to detect frauds which are often
intelligently planned and meticulously executed.
7.
While the need for trade facilitation and tax payers’ satisfaction cannot be
over-emphasized, any mala fide and corrupt practice to evade payment of
legitimate dues, needs to be handled as per established procedure of law. You
must also ensure that your actions do not hinder the smooth conduct of any bona
fide activity of an honest and law-abiding tax payer and do not, in any way,
add to their legitimate compliance cost. You should strive to build a
transparent and hassle-free tax regime where the assessee voluntarily complies
with the statutory requirements and dreads any breach of regulatory provisions
and procedures.
8. I
am particularly happy to note the buoyancy in Service Tax collection in 2011-12
which, at Rs. 97,389 crore, far exceeded the Budget Estimate of Rs.82,000
crore. The rate of Service Tax has been enhanced to 12 per cent in the Union
Budget, 2012 in order to gradually move towards a unified GST regime. A
‘Negative List’ approach for taxation of services is being introduced in the
current fiscal. Under the new approach, all services except those in the
‘Negative List’ or otherwise exempted, would come into the tax net. The new system will come into
effect from 1st July, 2012. The new comprehensive approach to taxation of services is a shining
piece of tax reform, preparatory to the introduction of GST. In a
nutshell, the comprehensive approach to taxation of services implies larger tax
base with limited number of exemptions.On the Central Excise side the standard
rate of excise duty has been increased from 10 to 12 per cent in the Finance
Bill, 2012. These changes are likely to help the Department in garnering
additional tax revenue.
9.
Central Board of Excise & Customs is celebrating 50 years of the Customs
Act, 1962. The Department has consistently strived to put in place a
transparent and efficient system of indirect tax administration. It has evolved
through in-house innovations and adoption of international best practices. The
facilitation measures introduced recently include a trust-based system of self
assessment of Customs duty by the importers and exporters coupled with a Risk
Management System (RMS) to identify risky consignments for assessment and
examination by the Customs officer. This is expected to substantially raise the
level of facilitation of imported consignments. I am confident that these
measures will encourage voluntary compliance and reduced transaction costs. Our
long term goal should be to achieve the global standard for time taken to clear
the goods at port, airport and land customs stations.
10. I
am aware of the recent advances made by your department in harnessing
information technology in indirect tax administration by way of e-payment of
taxes, e-filing of returns, electronic credit of refund and drawback amounts
directly to the assessees’ bank account. Apart from undertaking a pilot project
for developing a common portal for GST with the Centre and 11 States, the
Government has also approved a proposal to set up a Special Purpose Vehicle
(SPV) for GST called GSTN to implement and maintain the IT infrastructure
required for a smooth roll-out of GST.
11.
Smuggling of FICN, narcotics and psychotropic substances, illicit export of
flora and fauna; antiques and other prohibited goods pose a grave threat to our
economy. Commercial frauds perpetuated to evade payment of legitimate duty are
another area of growing concern. To enable you to deal with these concerns
effectively the initiatives taken to improve the infrastructural and
technological capabilities at your command need to be rapidly implemented.
12.
Customs Overseas Intelligence Network (COIN) of CBEC in various countries plays
an important role in exchange of information related to cross border
transactions. The existing nine COIN offices are contributing substantially to
support the functioning of DRI. Ministry of External Affairs has agreed for
creation of two more COIN posts in China to further expand the network. The
enlarged network will add to the operational capacity of Directorate of Revenue
Intelligence of CBEC.
13.
Capacity building needs to be accorded a high priority so that we are able to
build a team of dedicated and motivated workforce to respond to the challenges
confronting the department. The issues related to human resource development
should be given priority, and necessary steps to promote an administration with
a humane face earnestly pursued. You all at the senior level cannot remain
insensitive to the genuine concerns of your workforce, be it the legitimate
demand for a timely promotion or holding of DPCs or timely sanction of annual
increments, or payment of retirement benefits.
14. I
urge you all to put in your best efforts to augment the tax collections and
remain firmly committed to providing an efficient, responsive and tax payer
friendly administration. I understand that CBEC has constituted four Breakaway
Groups for in depth examination of some of the current issues that need the
immediate attention of the department. I expect each one of you to contribute
actively to the deliberations, brain-storm collectively to find out solutions
to the problems thrown up by these groups and draw road maps for future course
of action. I am sure, your active participation, enthusiasm and insight will
make this Conference a resounding success.
15. I
would conclude by reiterating what I said in my Budget Speech for 2012. A number of global and domestic factors militated
against the growth that had revived in the last two years. But India has
thrived under challenges and India will do so now…….Whether or not today’s
announcements make tomorrow morning’s headlines matters little, as long as they
help in shaping the headlines that describes India a decade from now. I look
forward to the outcomes of this conference.”
********
DSM/GN
Courtesy:
FinMin
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