The chamber suggested gradually privatising the task of revenue collection that would also help cut corruption. Citing example, it said several Latin American countries have earned success by involving private sector in revenue collection.

Opposing discretionary power of tax officials, the MCCI in its July edition of 'Chamber News' said this would lead to more harassment of taxpayers and create wider opportunities for corruption of tax officials.

The tax officials resort to corrupt practices and deprive the exchequer of huge revenue in exercising discretionary power, like right to arrest and seizure of goods given to assistant commissioners and inspectors of VAT (value-added tax), and power to customs officials in determining HS (harmonisation system) code, MCCI said.

"Although the finance minister had talked about reducing discretionary powers in his budget speech, this year these, in fact, have been increased," the chamber said.

The discretionary powers were curtailed by the Finance Act 2003 but these were reintroduced by the Finance Act 2004.

"We strongly feel that restoration of discretionary powers should be curtailed. Tax collections could be substantially increased if discretionary powers were curtailed or some checks and balances were put in place in their exercise," MCCI observed.

The chamber mentioned some sections of the income tax ordinance which provide discretionary power and create scopes for corruption for tax officials. They are -- the assessment on correct return, best judgement assessment, assessment in case of income escaping assessment, granting time extension for filing tax return, power of Inspecting Joint Commissioner of Taxes to revise orders of Deputy Commissioner of Taxes and paying tax refund, production of books of accounts and documents.

According to MCCI, the clauses of the ordinance that leave scope for corruption of VAT officials are -- giving price approval for levy of VAT, verification of VAT rebate claimed in current account and giving VAT registration number.