Tuesday, July 4 2006 18:48 Hrs (IST) - World Time -

New Delhi: The new simplified Income Tax bill to replace the archaic and voluminous tax law will be readied by this month end, Finance Minister P Chidambaram said today (July 4, 2006).

"We have given extended time to draft the new bill till July 15 and surely it will be drafted by this month end," he told reporters after inaugurating the annual conference of Incom Tax Chief Commissioners and Director Generals.

The new Income Tax bill is aimed at making the tax law more user-friendly, reduce the scope for litigation.

CBDT also proposes to dicard the concept of previous year and assessment year as part of the efforts to streamline the system.

Chidambaram said the tax department would adopt a four-pronged strategy to track down high-value parties to identify persons first, find out if the person has a Pan, find out if he had filed returns and then find out if his transactions reflected in his returns.

If that happens, tax compliance of this country will sharply increase, he said adding, "We have no interest in harassing or squeezing anyone. We simply want people to become more tax compliant."

He emphasised there was greater tax compliance than there was six years ago.

"But I think there are a lot of rich people still not paying the taxes that they should be paying," he said.

"The salaried class are obviously paying. But I think a large number of individuals who ought to be paying the correct taxes, are not complying" he added.

To facilitate filing of returns, Chidambaram said the Government has set up 321 help centres in 282 cities and towns to help individuals to file returns.



The help centres do not charge any fee, he said asking the large number of people to take advantage of these help centres which have started functioning from June 15. They will be in operation till August 15 and then March 1-31.



He admitted there was massive vacancy in the Tax department because of the Government's decision only to fill one-third of the vacancies.

"This is not a correct decision. Even if the decision had been taken for other departments, it cannot apply to the tax department. How can you fill only one third vacancies and yet increase revenues every year. There is no magic wand to raise revenue except through assessment," he said.

Chidambaram said he has therefore got a special dispensation from the Cabinet.

"We have got about 10,000 vacancies. We have got dispensation of 3,300 posts to be filled," he said.

But, he said the process of filling these vacancies in the Government was a difficult process. Although these posts have been sanctioned no posts have been filled so far.

He said he was going to bypass the procedure and go back to the department of personnel and ask for one-time exception to fill it in a different manner.

Regarding widening of the Annual Information Returns to cover more areas, Chidambaram said let the government deal with the massive information that it has and then it could add more.

Regarding those who pay Securities Transaction Tax, he said most of them were filing returns.

"If they are carrying business, they will take credit for STT payment from business tax," he said.

On Bank Cash Transaction Tax, he said he wanted the BCTT to be zero as this would mean that all transactions would be through bank channels.