Presently, only 1.2 per cent of the country's population (pegged at around 90 million) pays tax. Mumbai which contributes to around 40 per cent of the total direct tax revenue in the country, has a tax-payer base of a mere 13 lakh.

The minister has sought to widen the scope of the two-out-of-four-economic- criteria scheme by making it mandatory for those satisfying any one of the six criteria to file income tax returns.

"He basically plugged all loopholes in the two-by-four scheme so that avoidance of tax is reduced to the bare minimum", said an eminent Mumbai-based supreme court tax advocate and expert in direct taxation.

Under the two-out-of-four scheme, it was mandatory for a person fulfilling any two of the four conditions -- owns a house (of a specified area),has a telephone connection (including a cell-phone and pager), has travelled overseas or owns a four-wheeled vehicle -- to file income tax returns. In the new order, everyone fulfilling even one of the six conditions would have to file tax returns. The new criteria are: possession of a credit card and membership in a posh club.

The move to bring a total of 35 notified cities, from the present 23, under the purview of the PAN facility in the Income Tax Act has been welcomed by professionals.

By making it mandatory to quote PAN/GIR in all high-value transactions such as property purchases, fixed deposits of more than Rs 50,000 or payment of hotel bills exceeding Rs 25,000, the income tax department will surely trace those in the high income bracket who have been escaping the tax net, said Narayan Varma, a chartered accountant.

He feels that the decision to simplify the income tax return form (named Saral) for non-corporates will also encourage people to comply voluntarily.The government decision to deploymobile vans for distribution of income tax forms and for collection of returns was also welcomed.

According to SV Pikale, president, Tax Payers' Association of India, the three key words - Saral, Samadhan and Sanman in the direct tax proposals for simplification of procedures, better compliance with tax laws and recognition of honest tax payers is a step in the right direction.