Stability Of Tax Rates Good For Economy: Finance Secretary Ajay Bhushan Pandey
India is focussed on providing stability and simplifying the tax system, said Finance Secretary Ajay Bhushan Pandey, as the government, among other regulatory changes, lowered limitation period for reopening tax cases and eased compliance for senior citizens.
Stability of tax rates is good for the economy, Pandey told BloombergQuint in an interview after Finance Minister Nirmala Sitharaman presented the Union Budget on Monday. But “we need to get out of the mindset of tinkering with tax structures every year” during the budget.
The government, according to him, had slashed corporate tax rates, an exercise conducted outside the budget in September 2019, and last year, it gave an option to taxpayers to opt for lower tax regime by not claiming any exemption.
“[We] need to provide stability of tax rates and focus on improving compliance and simplification to improve tax collection — not only by increasing or decreasing the tax rates,” Pandey said.
Besides, the finance secretary is confident about achieving the revised tax collection targets, lower than the estimated Rs 5 lakh crore, this fiscal. The direct and indirect tax and excise duty collection, he said, was not particularly bad till January even in a pandemic year. The fiscal deficit target of 9.5%, too, is “realistic”.
Higher tax collection in this fiscal, according to Pandey, is due to better tax administration and compliance as the government has been taking targeted actions against individual evading the tax system through data analytics.
Direct gross tax collection is down only by 6.8% by January.
Net tax collected has contracted 9% due to higher refunds and gap will narrow in the next two months.
GST tax collection robust in the past four months.
Customs revenue, which used to be in the range of Rs 8,000-9,000 crore, was more than Rs 16,000 crore in December and January.
Taking the nominal GDP growth of 14-15% and adding tax buoyancy of 1.15%, we have estimated tax growth of 16.7-16.8% in FY22 which looks feasible.
Better tax administration and compliance have aided tax collection, which will improve in the next year, too.
The agricultural cess has been imposed only on 15 items which will not serve as an additional burden as in most cases we have compensated it by reducing other duties.
Watch the full interview here: