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The Income-Tax (I-T) department in Mumbai is summoning CEOs and CFOs of mid-size companies with the objective to communicate to them that anything less than the full payment of advance taxes will not be acceptable. I-T department sources said a face-to-face interaction helps in gauging the exact amount of tax payable by companies. Besides, it also helps I-T commissioners analyse the reasons for a company’s lower tax outgo. Importantly, through these interactions, the practice by some companies to make staggered advance tax payment is eliminated.

This exercise of summoning senior functionaries of Corporate India to the department coincides with the strict instructions given out by the Central Board of Direct Taxes (CBDT) to chief commissioners that anything less than the projected collection of Rs 4 lakh crore will not be acceptable. CBDT, it is learnt, is trying to ensure that it does not miss its target for the second time in a row.

At a meeting of the administrative chief commissioners held recently, CBDT chairman SSN Moorthy made it clear that anything less than Rs 4 lakh crore was “non-negotiable.” While most senior officers are certain that the department will easily cross the original target of Rs 3.7 lakh crore, they do not vouch for meeting the revised target. The target was revised during the course of this fiscal on the premise that the economy would see an upswing towards the close of the fiscal. Mr Moorthy, however, had told them clearly that CBDT will not compromise on the revised target.

When asked by ET on how the department will meet the revised target, Mr Moorthy merely said, “That is for the chief commissioners to figure out”

The chief commissioners, who are grappling with the issue, are also worried about the not-so-encouraging trend visible in the tax deducted at source (TDS) collections, which usually account for a third of the total direct tax collections. Though the TDS collection is expected to marginally exceed last year’s figures, it is now almost certain that it will fall short of the projections for FY10. For example, the Mumbai Commissionerate expects to collect TDS of about Rs 40,000 crore by the end of this fiscal, a figure that marginally exceeds that of last year. The target for TDS collections out of Mumbai is Rs 52,000 crore, which means there will be a shortfall of Rs 12,000 crore. Importantly, oil companies will not pay any tax this year, since they have not been allowed to issue oil bonds.

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