Bangalore, March 27 (PTI): Finance minister P. Chidambaram today said the first of the five proposed large taxpayer units (LTUs) was expected to start operations from July 1 and the remaining four by the end of this year.

Addressing a seminar on the formation of large taxpayer units in India, Chidambaram said the first unit would hopefully start functioning from July 1. However, he hopes to see all of them in place by the year-end, he added.

The government had earlier announced a proposal to set up LTUs which would act as a single window facilitation centre for all large entities paying excise duty, corporate tax/income tax and service tax, initially in Bangalore, Chennai, Delhi, Calcutta and Mumbai.

He, however, did not say where the first LTU would start functioning.

Quoting preliminary figures, Chidambaram said the potential number of tax payers to be served by the LTUs in these five cities is about 843.

Chidambaram said it was not mandatory for the large taxpayers to be served by LTUs. However, he urged them to give the units a “fair trial”.

“We promise you a modern, efficient tax-payer-friendly environment and office using most modern technology. You will have a relationship tax executive who will help you in tax-related matters,” he said.

Chidambaram said India is lagging behind several countries in introducing LTUs. As many as 13 countries in Asia, including Pakistan, Sri Lanka, Bangladesh and Nepal, have already launched the service.

LTUs have been found to reduce compliance and transaction cost of tax payers and increase efficiency in tax administration, according to him.

He said the revenue department wants to collect taxes from large taxpayer units “something akin to bee drawing honey from a flower without hurting the flower” -- collecting taxes without hurting their businesses or their professions.