ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Praveen KishoreSubscribe to Praveen Kishore

Grappling with Foxes and Hedgehogs of India’s Senior Civil Services

One of the neglected areas of reforms of India’s organised senior civil services relates to the rationalisation of its branching structure and the related debate of generalist vs specialist services. The present structure is a confusing hotchpotch of specialist and generalist branches, at different layers of government, and has largely resulted in inter-branch rivalries,dissatisfaction, and a dysfunctional organisational structure, affecting the efficiency of the senior management and governance. In light of this, a rationalised redesign, effected through a mix of mergers, abolitions, and reinvention and with specialised–generalist branches responsible for broad domains of functions, appears to be the most suitable strategy for reform.

Administering Goods and Services Tax in India

The long process of introducing a comprehensive Goods and Services Tax at the national level has thrown up many complex challenges. The question of the nature and structure of the agency for administering and collecting the GST is one of the most crucial ones. It appears that the existing institutional and organisational structure with multiple departments (one at the union and one in each of the states) would be maintained for collection of what is essentially a single tax (though with two components), thereby severely eroding most of the expected benefits of a national GST as well as putting a heavy burden on taxpayers. The influence of the bureaucratic complex and power politics of the organised civil services as well as a lack of political will are the major reasons for such a possible outcome. The need is to move towards a harmonised, modern and professionally managed national revenue agency for GST with a proper safeguard mechanism for preserving the fiscal federal nature of India and its states.

Collection Trends, Classification of Expense Heads and Avoidance of Fringe Benefits Tax

The government claims that the Fringe Benefits Tax has been introduced to tax those kinds of fringe benefits which are collectively enjoyed by employees in the form of facilities/amenities and therefore difficult to identify, segregate and apportion among beneficiaries for taxation. Accordingly, the tax liability has been fixed on employers, and not on the employees. fbt collection data for first two years (2005-06 and 2006-07) have been analysed to gain a deeper insight for fine-tuning. Some statistical tests have been conducted. The test of equality of two proportions for a large sample shows that the proportion of fbt collection under different heads has remained the same over the two years. The chi-square test for equality of proportion shows that this proportion has remained the same for most sectors. However, the chi-square test for homogeneity of sample data for each sector and each head indicates that sample data are not homogeneous. It points towards arbitrary booking of expenses under different heads, perhaps to avoid fbt.

Analysis of Fringe Benefits Tax and Its Collection Pattern

A recent controversial tax policy change has been the introduction of the fringe benefits tax in 2005. The central government claims that it has been introduced to tax those kinds of fringe benefits, which are collectively enjoyed by employees in the form of facilities/amenities and are difficult to identify, segregate, and apportion among beneficiaries for taxation. Accordingly, the tax liability has been fixed on employers, not on employees. The fbt collection data for the first two years have been analysed here to gain insight for further reforming and fine-tuning the fbt regime. fbt collections from various sectors of the economy have been examined and the significant heads of fbt identified. The banking, petrochemical and infotech sectors are the largest contributors, and employee welfare, conveyance and telephone connections are the largest contributing heads of fbt.
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