Skip to main content

Revenue headcount spike at odds with GST

Guess which department of the Union government had the dubious distinction of seeing the biggest increase in its headcount last year? Not the police or the postal department, not even the railways. It was the revenue department, whose staff strength improved by a whopping 84 per cent at the end of March 2016, compared to what it was in the same month of the previous year.
From about 96,000 employees (mostly engaged in the business of tax collection) at the end of March 2015, the revenue department saw its manpower strength go up to about 177,500 by the end of March 2016. Among the big departments in the government, defence was the only other one that saw double- digit increase in the space of just one year with its civilian staff strength going up by 25 per cent from about 40,000 to over 50,000.
The manpower strength of the police department under the Union home ministry went up by just three per cent in this period. And the railways that has over 1.3 million employees, accounting for about a third of the total government staff strength, has not let its headcount increase at all. So if the total government staff strength went up by about six per cent last year, the revenue department certainly made the biggest contribution.
And it is this rise which now should come under scrutiny even as tax reforms gather pace. Remember that the efficiency and effectiveness of the revenue department employees in performing their basic function of collecting taxes are crucial for the government’s fiscal management. So if the revenue department’s staff strength goes up by 84 per cent in just one year, the obvious question that would arise is what gains the government has notched up as a result — whether by higher tax collections or improvements in tax administration.
Prime Minister Narendra Modi recently said that only about six per cent of the total direct tax collections are accounted for by the tax department’s efforts and initiatives. The remaining share of taxes comes through tax deduction at source or routine filing of income- tax returns. So, questions are bound to be raised over the cost effectiveness of increased manpower strength in the revenue department. They assume greater significance now that the goods and services tax or GST is set to be introduced from next year.
Already direct tax simplifications have led to greater use of technology and should have resulted in manpower savings. If savings were not possible, then at least retraining and redeployment of existing staff in newer types of tax assessment and investigation procedures should have been planned. It is not clear if such plans were implemented because there is as yet no visible sign or impact of the use of advanced technology for tax collections. Instead of a reduction in the revenue department’s staff strength, the overall manpower needs seem to have risen as seen in an increased headcount.
Even as the country gears up for the roll- out of GST from the coming financial year, it is of course important that such training and redeployment needs should be an area of priority action. While 60,000 indirect tax officers are now to be retrained for rolling out GST, it is puzzling that nobody in the government is as yet talking about the need to reassess the actual manpower strength of those who are responsible for indirect taxes.
One of the biggest positive outcomes of GST is that the new system reduces the scope for discretion and bureaucratic intervention. Not only will multiplicity of taxes become a thing of the past, even the number of tax rates will see a significant decline under the new regime. Moreover, the GST Network, the technology platform for ensuring payment of taxes and set- offs at various stages of production or the supply chain, will substantially reduce manual workload.
It is important for the government to recognise that a successful roll- out of GST would be critically dependent on trained revenue staff, who should not be worried over their changed roles under the GST regime. The goal of a national common market through GST will be difficult to realise if the revenue department officials are allowed to engage in a turf battle to protect and preserve their earlier jurisdictions and power.
GST and its smooth administration will of course need reskilling of the revenue staff. But more important will be a reduction in the revenue department’s staff strength as the new taxation regime can do with fewer tax officers.
Business Standard New Delhi, 08th August 2016

Comments

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...