Rs 1 crore excise = large taxpayer

New Delhi, Aug 1 | Updated: Aug 2 2005, 05:30am hrs
Any taxpayer who has paid more than Rs 1 crore as excise duty last fiscal will qualify for being a large taxpayer, whatever may be his income-tax, corporation tax or service tax liability. The finance ministry has decided to fix the criterion for the selection of large taxpayers only in relation to the incidence of excise duty on him. A high-level committee on large taxpayer units (LTUs), co-chaired by the chairpersons of the Central Board of Excise & Customs (CBEC) and the Central Board of Direct Taxes (CBDT), has concluded that excise liability, as per payments made in the previous fiscal, would be a reliable indicator of the capacity of a taxpayer.

Official sources told FE that the large taxpayer units, which will cater for requirements of large tax payers, are likely to be operational in five metros, including Mumbai, Delhi, Kolkata, Chennai and Bangalore, by February 2006. Each LTU would be headed by a chief commissioner, either of income tax or excise, the sources said. There will be 400-500 personnel in each unit. In the first phase of the project, the government expects to provide the single-window service to as many as 2,500 units. Although there are over 5,500 manufacturing companies who have paid excise duty of over Rs 1 crore last fiscal, about 2,500 are based in the five metros, the sources said, adding that each LTU would, therefore, provide services to 400-600 units.

The CBDT-CBEC committee is currently in the process of drawing up the methodology for running the LTUs, which have international presence and is already operational even in neighbouring Pakistan.

In first phase of the LTU project, services in relation to three taxes- excise duty, income tax and corporation tax - would be covered. According to sources, the second phase of the project, which is likely to be launched two-three months after the five units become operational, would cover service tax also.

In the Budget 2005, Mr Chidambaram had said LTUs would be set up in major cities. The sources said once the country followed a comprehensive goods and services tax (GST) structure, the functioning of LTUs would be further streamlined. Under the GST system, a single rate for indirect taxes might be introduced.