Cabinet Secretary Kamal Pande has called a meeting on Friday with the revenue department to discuss the progress made on removal of tax exemptions as per the two Kelkar reports on direct and indirect tax.

The meeting is part of the priority agenda earmarked for completion by the government, before going into the poll mode.

Mini-Budget: Complete Coverage

The meeting assumes significance as Finance Minister Jaswant Singh had said on Wednesday that an impersonal and rule-based tax system, with the minimum number of exemptions, was necessary to make more people pay taxes voluntarily.

Singh also does not seem to have done with his tax proposals yet. The ministry is preparing another set of tax notifications, which are likely to coincide with the vote-on-account scheduled for next month.

The income-tax department expects to flag off the Tax Information Network formally next week, which will be a major step towards the computerisation of the entire tax database.

The indirect tax department is, however, confident the fresh set of measures will not have a substantial revenue impact.

While they have ruled out a reduction in the rates of special excise duties levied on luxury goods, small-scale manufacturers in a large number of areas will be able to get relief by higher cut-offs.

The ministry may also eliminate some of the exemptions in direct tax, which do not affect personal tax rates.

The measures will buttress the finance minister's commitment to move towards a simple and progressive tax regime.

Officials said since the finance ministry would have to table the Finance Bill in Parliament in any case to renew sunset clauses in the tax law like tax deduction at source, there is ample scope to do these tinkerings.

Tax meet

• The meeting is part of the priority agenda earmarked for completion by the government, before going into the poll mode.
• The meeting assumes significance as Finance Minister Jaswant Singh had said that an impersonal and rule-based tax system, with the minimum number of exemptions, would make more people pay taxes voluntarily.
• The finance ministry will come up with another set of tax notifications, which are likely to coincide with the vote-on-account scheduled for February.