Meanwhile, the Cabinet has also decided to reduce the workforce of the income-tax department from 57,989 to 55,234.

While the number of CCITs and CCIs in the Central Board of Direct Taxes (CBDT) will go up to 116 and 698 respectively, the total staff strength will come down by 4.75 per cent.

According to official sources, the restructuring of the income-tax department would improve efficiency and effectiveness of direct tax administration necessary for bringing in more revenue.

It will also reduce harassments to public and ensure greater accountability.About the impact of the proposal on salary bill, sources said "it will be very marginal."

The officials pointed out that while taxpayers have increased from 80 lakhs in early 90's to about 250 lakhs at present, there has been no corresponding change in tax administration. Also the direct tax collections, as percentage of GDP, has increased from 2.1 per cent in 1990-91 to 3.4 per cent in 1997-98. The annual direct tax collection is over Rs 55,000 crore as compared to about Rs 10,000 crore in early nineties.

"It is equally significant that in a population of 100 crore there are only 2.5 crore tax payers besides several lakhs (if not crores) of potential taxpayers who still do not file their tax returns", officials said.

The sources, however, ruled out any retrenchment on account of the decision to reduce the workforce in the department. On the other hand, it was pointed out that staff would be given computer training and redeployed.