Gujarat Income Tax Dept Woos Businessmen: Journalist Janvi Sonaiya Explains Why
Imagine a billionaire business being invited to an event organised by the State Income Tax Department. If this surprises you, it surprised businessman Pankaj Patel—Chairman of Cadila Healthcare, the fifth largest pharmaceutical company in India—too. He was invited to the 162nd Income Tax Day celebration on July 24 in Ahmedabad.
Journalist Janvi Sonaiya said, “The step was taken by the I-T department with an aim to bridge the gap between the department and the business lobby of Gujarat, especially the top taxpayers. Principal CCIT, Gujarat, Ravindra Kumar rewarded the top taxpayers of the state on the occasion.” Sonaiya has been covering taxation, politics and social issues in Gujarat. Her investigative stories have been published in The Wire, CNN, NBC News and other publications.
“Gujarat is known to be a hub of entrepreneurship. Business runs in the very blood of Gujaratis, it is said. Despite this, most businesses have their registered offices in Maharashtra, even though a large part of the business is handled from Vapi, Surat, etc. This results in revenue loss for the state I-T department.” adds Sonaiya. She hails from a small town of Saurashtra, Jam-Khambhalia and she shifted to Ahmedabad to make a career. She has worked in The Times Group (Ahmedabad Mirror), Divya Bhaskar, DNA newspaper, Desh Gujarat and other media groups. She is currently working with digital media company Vibes of India.
Addressing the issue, Gujarat CCIT-1, Ahmedabad, SS Rana says, “Gujarat Income Tax is losing out on revenue as most companies have their registered offices in Maharashtra. We request the businessmen to switch their registered companies to Gujarat. After all, tax should be paid to the state where the actual work is done.” It has to be noted that companies need to file all statutory returns, including income tax, where their registered offices are located.
Patel says, “Even Albert Einstein said that the toughest thing to understand is the income tax. Earlier there was apprehension about I-T officials. It was intimidating to meet an I-T officer but not anymore. The cooperation level has improved. I will ask my peers to shift their corporate offices to Gujarat.”
Why are the registered offices in Mumbai?
“Mumbai is the financial hub of the country. A businessman has to visit the city for ultimate clearance. Hence, earlier it was a strategic decision to keep the headquarters in Mumbai. But now, Ahmedabad is catching up with Mumbai and the ease of business has improved in the city,” says an IRS officer from Aaykar Bhavan, Ahmedabad.
The registered offices of most companies are set in metro cities due to better connectivity and infrastructure. The shift also results in administrative convenience. At the same time, it centralises activities pertaining to income tax assessment—a businessman has to deal with only one income tax office and registrar of companies (ROC).
Dip in tax collection
In 2021-22, Gujarat’s tax collection stood at Rs 70,000 crore. This was out of a total of Rs 13.85 lakh crore tax collection countrywide. It has to be seen in the context of what the situation was earlier. As per the data, during the British Raj in 1914-15, Gujarat collected Rs 1 crore tax out of a total of Rs 3 crore tax collection. At the time, Gujarat had 80,000 taxpayers out of a total of 3,32,000 taxpayers in the country.
“Over the years our tax collection has reduced as most entrepreneurs have shifted their head offices to either Pune or Mumbai. We request them to bring them back to Ahmedabad,” adds Rana.