Targets in the new LTU Era

By Vijay Kumar

As the Financial year closes, normally there will be hectic activity at the Commissionerates. Several reports and brochures analyzing the revenue from various angles are prepared and submitted to the bosses. Tons of papers and hundreds of man-hours are spent on this single activity called revenue performance and reaching the targets. The atmosphere in the revenue meeting will be charged and the senior officers often try to find out ways and means to satisfy their bosses about their revenue performance.

But, is all this going to change from 1st April 2006? LTUs are going to be opened in the Metros from the next financial year. Under this, the top assesses can choose to pay tax and file returns at their head offices instead of having multiple registrations at different locations. So though the manufacture and clearance takes place in one Commissionerate, the revenue will be realized in another.

We already have Centralised registration for payment of Service Tax under which, though the service is rendered at different places, the tax payer can choose to pay at a Central office. As per the statistics, in 2004-05, the five Metros contributed 64% of the revenue from Service Tax. The remaining Commissionerates contributed only 36% of the Service Tax revenue. It doesn’t mean that they are not doing well, but due to Centralised registration at Metros, the revenue is accounted there though the actual service is rendered elsewhere.

But, as old habits die hard, the above logic has little impact on our tax administrators and it is learnt that there are some serious reviews of revenue performance on service tax front. The targets are fixed for the Commissionerates and the growth rates are compared vis a vis national growth rates and are seriously followed.

Coming back to LTUs, once the manufacturer shifts the payment of duty from a Commissionerate to a Metro, there may be serious objection from the jurisdictional Commissioners who are very much concerned about the revenue! ( of course from their Commissionerates). At any cost they may resist the tax payer from exercising his option to join the LTU scheme. So there may an inbuilt resistance from the Senior officers which our FM needs to give attention to and it may not be surprising if at the end of the day we find not even one from his projected 582 entities join this mega scheme.