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Income Tax Welfare Fund with a Corpus of Rs.100 Crore Operationalised after 12 Years

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Finance Minister asks CBDT to Address the Issue of Unwanted Litigation with Taxpayers and Realise Locked up Revenue in Appeals

Finance Minister, Shri Pranab Mukherjee announced the operationalisation of the income tax welfare fund which was pending since 1998. The fund has a corpus of Rs.100crore and will be available for welfare activities of the employees of the income tax department. The finance Minister made this announcement while addressing the Annual Conference of Chief Commissioners and Director Generals of Income Tax, here today. The Finance Minister also announced that in order to upgrade the skills of the IRS officers, an advance mid-career training programme for them would be started during the current year. This will equip officers to face challenges dealing with complex international transactions and fight menace of tax avoidance schemes using tax havens and low tax jurisdiction. The Finance Minister also asked CBDT to ensure deployment of human resources in consonance with requirement of the tax laws. In this regard, he specifically asked for timely completion of exercise of cadre restructuring and hold regular departmental promotional committee (DPC) as per the DoPT calendar. The Finance Minister advocated the need to focus on preventive vigilance and adopt a strategy for zero tolerance for corruption. He asked CBDT to set up a Committee to examine the vigilance practices and procedures in few select countries. The experience of other countries can be used to streamline and strengthen the vigilance administration in Income Tax department. In order to provide the services to the taxpayers of desired quality, the Finance Minister stressed that the same become technology driven. For the current year, the Finance Minister asked senior officers of the income tax department to exceed the target of direct tax collection at Rs. 4,30,000 crore in the Budget estimates. He asked the department to adopt special strategy to monitor TDS compliance at the District level, State level and at Central level.

In the end, the Finance Minister expressed his concerns over the rising litigation with the taxpayers and the quantum of revenue locked in appeals. He stated that taxpayers should be encouraged to Mutual Agreement Procedure (MAP) which has emerged as a preferred alternate dispute resolution mechanism. He asked CBDT to come out with a comprehensive proposal to address the issue of unwanted litigation with taxpayers and also to realise locked up revenue in appeals.

Following is the complete text of the Finance Minister’s speech:-

“Direct Taxes, now the major resource provider to the Central Government, have grown at an average annual rate of 24 percent in the last five years and have nearly trebled from Rs.1,32,771 crore in financial year 2004-05 to about Rs.3,78,000 crore in financial year 2009-10, increasing its share from 4.1 percent to 6.1 percent of the Gross Domestic Product (GDP). This tremendous growth has been made possible not only due to rationalisation of tax structure and improvement in tax administration leading to better tax compliance, but also persistent and unrelenting efforts of employees of the Income Tax department.

To improve compliance further, tax laws need to be simple, stable and robust; tax rates should remain moderate; and multiplicity of tax exemptions and deductions should be gradually phased out in order to widen and deepen the tax base. Tax administration needs to be further toned up by appropriate use of technology on the one hand, and improving professional competence and responsiveness of the employees on the other.

A major tax reform initiative has already been announced in the proposed ‘Direct Taxes Code 2009’ to simplify, rationalize and consolidate the laws and procedure, relating to direct taxes. Its draft is under revision, taking into consideration the areas of concern expressed by various stakeholders, and the discussion paper will be shortly in the public domain before introduction in Parliament in the forthcoming monsoon session. It will indeed be legislation for the 21st century, which will witness the emergence of an economically strong and vibrant India. I anticipate that the new code will usher in major changes in procedures and practices of Direct Tax. The Department, therefore, needs to draw a roadmap for administratively meeting the challenges and the changes that will be introduced by the new Code. The Human Resource Directorate of the Department should draw up plans for training in cooperation with tax training institutes for capacity building for implementation of the Direct Tax Code. The transition from existing law to DTC would require completion of delegated legislation in a time bound manner. CBDT should ensure smooth transition by planning the activities schedule well in advance.

Growth in international trade and commerce driven by globalisation is throwing up new and complex challenges. Globalization offers a global market for product and services but at the same time it also poses challenges. The recent financial crisis has shown how an economic difficulty of one country can get exported to other countries. Similarly, the development of tax shelter products and use of tax havens is another challenge which emanates from globalization. In our response to global challenges we have set up two Income Tax Overseas Units (ITOUs) within Indian Missions in Singapore and Mauritius to facilitate exchange of information. Eight more such units in USA, UK, Netherlands, Japan, Cyprus, Germany, France and UAE are also being created on similar lines. I am hopeful that these measures would result in seamless flow of tax related information from foreign tax jurisdictions and would strengthen our fight against menace of tax evasion using cross border transactions .

The department needs to improve its infrastructure to match global standards of delivery of taxpayer services. The effective roll out of Sevottam and Aayakar Sewa Kendra (ASK) would require adequate infrastructure. It is necessary to make the infrastructure state-of-the art to improve the working environment and to make a visit to the tax office a pleasant experience. Processing of tax returns, now done on the National Computer Network, has to be made more efficient. Towards this, two more Centralized Processing Centres (CPCs) at Pune and Manesar should be set up expeditiously. Efforts should be made to further popularise and increase electronic filing of tax returns and electronic payment of taxes to reduce paper-work and make taxpayer services environmentally friendly. The scope of Large Taxpayer Units (LTUs), presently operational in four metropolitan cities, needs to be expanded for deepening of tax base as well as for centralized services to large taxpayers.

While taxpayer services have improved there are still large numbers of taxpayer grievances, including grievances relating to tax refunds and credit of TDS, which need to be attended on urgent basis. At the systemic level CBDT should ensure that Directorate of Systems take immediate steps to streamline the issue of credit of TDS. Apart from systemic changes, the grievance redressal mechanism including Ombudsman need to be integrated and streamlined. A holistic approach needs to be developed to cater to the rising expectations of taxpayers. The CBDT should immediately come up with a comprehensive and net-based grievance redressal mechanism in line with the best global practices.

A number of services offered by the department have become technology driven. It may not be possible to deliver the services of desired quality in the existing structure of tax administration. CBDT may come out with a new structure, which leads to faster adoption of technology and innovation. The CBDT may, therefore, consider hiving off its technology driven taxpayer services to a Special Purpose Vehicle (SPV), which can better deliver such services in the public-private-partnership mode. This will lead to innovation in delivery of services to taxpayers and also involvement of public in delivering the services.

For the current financial year, the direct tax collection target has been fixed in the Budget Estimates at Rs.4,30,000 crore at a growth of 13.7 percent over the actual collection last year. We have deliberately called this conference in the beginning of the financial year to deliberate strategies and draw action plan to achieve this target. Apart from concentrating on big cities and towns, Department should also look to smaller towns and cities for widening of tax base. The smaller towns and centres have emerged as centres of growth due to inclusive growth agenda of Government. Department may also develop special strategies to monitor TDS compliance at the District level, state level and at Central level.

The GDP is poised to grow at 8.5 percent during 2010-11. Sectors of the economy performing well should be monitored for tax compliance and we should get our due taxes. The department should also make attempts to widen and deepen the tax-base further. It should improve utilization of information relating to high value transactions available through Annual Information Returns (AIR), Central Information Branches (CIB) and other sources. Using multisource data, Department should refine risk profiling of taxpayers and assessments and investigations should be carried out accordingly. Using this intelligence data department should develop credible deterrence for taxpayers, who are habitual tax evaders.

Skills of the personnel working in the department need constant up gradation in view of changing tax regulations, technology and global economic environment. Though I find that the CBDT has taken some steps in this direction through Knowledge Management by yearly publication of the book titled “Let us Share”, containing the best orders and practices, yet further steps need to be expeditiously taken in its training and skill up gradation programmes adopting the best global practices. I understand that CBDT is already providing exposure to probationers at NADT about international practices through international attachments. This has to be taken forward by suitably designing mid-career training programmes for officers at regular intervals. This will equip officers to face challenges of dealing with complex international transactions and menace of tax avoidance schemes using tax havens and low tax jurisdictions. This will also help us in getting our due share of taxes especially from cross border transactions.

I am happy to announce that Advanced Mid-Career Training Programme (AMCTP) for IRS officers would be started during the current year.

A satisfied work force is the backbone and strength of an organization. We have modified the transfer policy for the Indian Revenue Service (IRS) officers to improve satisfaction levels and minimise unwarranted service litigation with our own employees. The Standing Committee on Finance, in its report for 2009-10, has expressed concern about shortages of manpower in the Department. This needs to be addressed urgently, especially in the face of the exponentially increasing workload, and the challenges of maximising revenue generation along with efficient taxpayer service. I am told that cadre restructuring of CBDT is pending for quite some time, which has adversely affected the implementation of core areas of work in the Income Tax department. The tax laws can be implemented effectively by aligning the tax administration with the intent of tax policy. If there is a mismatch, then it may be difficult to implement a tax policy, however good it may be. CBDT should ensure that deployment of human resources is in consonance with requirement of the tax laws and this should be ensured by completing the timely exercise of cadre restructuring and by holding regular departmental promotional committee (DPC) as per the DoPT calendar. In the long term, we should aim for Human Resource policy which is, conducive for specialisation, promotes administrative innovation, provides equal opportunity and keeps employees in high state of motivation.

In the last year’s conference, I had emphasised the need for expediting vigilance matters. I find that though there is improvement, the progress is not at the desired levels. More focussed approach with proper adherence to prescribed time-lines is needed to expedite vigilance matters. I want to see that no charge sheets are filed against our own employees at the last day of retirement after more than 30 years of service to Government. We should ensure that guilty is punished but at the same time ensuring that those who have performed their duties and victims of frivolous complaints should be adequately protected. Department need to focus on preventive vigilance and adopt a strategy for zero tolerance for corruption. CBDT should set up a committee to examine the vigilance practices and procedures in few select countries. The experience of other countries can be used to streamline and strengthen the vigilance administration in Income Tax department.

The rising litigation with the taxpayers and the quantum of revenue locked in appeals is a matter of serious concern. The strengthening of Settlement Commission, setting up Dispute Resolution Panel (DRP) may address the litigation issues with the taxpayers to some extent. I am told that under mutual agreement procedure (MAP) negotiations under Indo-USA DTAA a tax demand of Rs.800 crore in 48 cases has been confirmed. This is a good development and tax-payers should be encouraged to invoke MAP, which has emerged as a preferred alternate dispute resolution mechanism. In spite of these efforts, we need to develop more strategies to reduce the litigation with the taxpayers. I would like CBDT to come out with a comprehensive proposal to address the issue of unwanted litigation with taxpayers and also to realise locked up revenue in appeals.

Before I close, I am happy to announce the operationalisation of the Income Tax Welfare Fund, which was pending since 1998. The Fund has a corpus of Rs.100 crore kept in interest-bearing deposit. The interest earned annually on this deposit, and other annual accruals to the Fund, will be available for welfare activities of employees of the Income Tax department. I am sure that CBDT will come out with innovative welfare measures, which will further motivate employees of the Department to excel in their area of work.

I wish this Annual Conference a great success. I would be looking forward to the outcomes of the deliberations.”

Central Government Group ‘D’ Employees warmly welcomes the Modified Assured Career Progression Scheme

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Central Government Group ‘D’ Employees warmly welcomes the Modified Assured Career Progression Scheme which was announced in the 6th CPC.

A Government order which announced that those Group ‘D’ employees who got ACP I and ACP II after completing 24 years of service will not be taken into account for the benefit of MACP Scheme was widely appreciated by every one.

The Group ‘D’ classification was abolished and they were inducted into Group ‘C’ employees. The minimum qualification was SSLC and they were given training and fixed Rs.1800 as Grade Pay.

A guidelines says that the ACP and promotion which was given before Rs.1800 as Grade Pay will not be counted for the MACP. A Group ‘D’ employee who completes 30 years of service will get Rs.1900 – 2000 – 2400 as Grade Pay, whereas who got promotion from Group ‘D’ to Group ‘C’ were given Rs.2400 – 2800 as Grade Pay. Employees who completed 30 years of service were given Rs.4200 and Rs.4600 as Grade Pay. Which was gladly welcomed by all.

One of the email from our reader received to us said, “It was a glories moment in my life, it was a dream come true”.

He also says, “I was appointed as a Group ‘D’ employees in 1973 in central government service and got promotion as Group ‘C’ in 1976 and completed 24 years service without any promotion. In 1999, I got ACP I and my basic pay fixed as Rs.4000-100-6000(Pre revised scale), but ACP II was refused to me as the promotion from Group ‘D’ to Group ‘C’ was he reason.

In 2006, I got promotion and my basic pay was fixed at Rs.4500-125-7000(Pre revised scale).

He says again ”In the year 2008, MACP was introduced. I came to know that this is different from ACP. Upgradation will be given in every ten years of service incase of without promotion. I felt that I will not get any benefit from this. But told that I will get Rs.4600 as Grade Pay. I was greatly surprised to hear this.

After that, the implementation came and I received the new payment which was very much a dream for me”. My pay fixed as follows…

Firt MACP I – Rs.1900 – Rs.2400 Grade Pay
Second MACP II – Rs.2400 – Rs.4200 Grade Pay
(Rs.2800 Grade Pay is not treated as promotion)
Third MACP III – Rs.4200 – Rs.4600 Grade Pay.

Source: Govtempdiary

Central Government Employees Transfer Rates Reviewed in case of A-1/A/B-1 Cities...

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No. 19030/3/2008-E.IV
Government of India
Ministry of Finance
Department of Expenditure

New Delhi dated the 8th June, 2010

Office Memorandum

Sub: Travelling Allowance Rules - Implementation of the Sixth CPC.

The undersigned is directed to refer to this Department's OM of even number dated 23.09.08 on the subject cited above and to say that it has been brought to Government's notice that the issue of this OM has led to lowering of the per km rates for transportation of personal effects by road on transfer in the case of A-1 / A / B-1 class cities. The provision under para 4.C of the said OM has been reviewed and it has now been decided to replace the existing provisions contained in para of the said OM dated 23.09.08, with the following:

"C. Transportation of Personal Effects
Grade Pay
By Train/Steamer
Rate per Km for transport by
road (Rs.Per Km.)
X & Y class
Z class
Officers drawing Grade
Pay of Rs. 7600 and
above and those in Pay
Scale HAG+and above
6000 Kgs. By Goods
Train / 4 wheeler
wagon / 1 double
(Rs.0.005 per
kg. per km)
(Rs.0.003 per
kg. per km
Officers drawing Grade
Pay of Rs. 4200, Rs.
4600, Rs.4800, Rs.5400
and Rs.6600
6000 Kgs. By Goods
Train / 4 wheeler
wagon / 1 single
(Rs.0.005 per
kg. per km)
(Rs.0.003 per
kg. per km
Officers drawing Grade
Pay of Rs.2800
3000 Kgs. 15.00
(Rs.0.005 per
kg. per km)
(Rs.0.003 per
kg. per km
Officers drawing Grade
Pay of below Rs.2800
1500 Kgs. 7.50
(Rs.0.005 per
kg. per km)
per kg. per km

The rates for transporting the entitled weight by Steamer will be equal to the prevailing rates prescribed by such transport in ships operated by Shipping Corporation of India."

* As per classification of cities for the purpose of admissibility of House Rent Allowance.

2. Attention is also invited to para 4.B of the OM dt. 23.09.08, which regulates the payment of Composite Transfer Grant. In this connection, it is reiterated that the

components and incidentals which were merged/subsumed with the Composite Transfer Grant, as per para 4.B of this Ministry's OM No.19003/2/97-E.IV dt. 17.04.98, remain unchanged.

3. The revised provisions as under para 1 above, shall be applicable w.e.f. 01.09.2008, i.e. the date from which revised T.A. rules are applicable.

Deputy Secretary to the Government of India

Travelling Allowance Rules - 6th CPC
Travelling Allowance Rules - 6th CPC
Admissibility for reimbursement for travel within the city

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