Finance secretary: Tax targets achievable with just compliance improvement, no extra burden on taxpayers likely

By:
Categories: GST Recent News, News
No Comments

Indian Union Budget 2021-22: The projected growth in direct tax collection for FY22 would be achieved on the back of expansion of tax base without having to put any additional burden on the taxpayers, finance secretary Ajay Bhushan Pandey told FE. The Budget has estimated that the combined revenue form corporate and personal income taxes would rise by 22.4% to Rs 11.08 lakh crore in the next fiscal.

The Budget estimates for the next fiscal have pegged gross tax revenue growth at 16.7% with buoyancy of 1.2. The collections have contracted in the last two years – by 3.4% in FY20 and a likely 5.5% (RE) in the current fiscal.

Speaking on the concern that the introduction of Agriculture Infrastructure and Development Cess (AIDC) would further squeeze states’ share of the Centre’s tax revenue from the divisible pool, Pandey said that a dedicated fund was needed for improving agriculture infrastructure and it had been done by sacrificing the Centre’s own revenue by cutting additional excise duty.

“We have shown in the case of GST that the revenue collections improve along with general level of compliance, and the same is likely to be mirrored in the direct tax mop-up next year,” Pandey, who also hold the charge of revenue secretary, said. The GST collection in the first six months of the fiscal (April-September) shrank about 24% on year but has grown by 8% in the subsequent four months.

On the direct tax front, the collection till the end of January was lower by 6.7% compared to the same period a year ago.

The finance secretary said that the Budget has proposed several targeted measures to plug evasion and improve compliance. “We have used the tax deducted at source (TDS) mechanism selectively, and in combination with data from various sources, including banks, mutual funds, stock market and property transactions, we have analyzed and identified outliers against whom enforcement action is initiated,” Pandey said. He added that the method ensures that the large section of taxpayers remain unaffected while the outliers are targeted made possible by the department’s technological capability.

Among measures to improve compliance, the Budget has proposed to levy higher TDS amount on those not filing income-tax returns. Further, the Budget has also tried to plug avenues of tax savings for high net-worth individuals by making investment instruments like ULIPs and Provident Fund taxable if annual contribution is higher than Rs 2.5 lakh.

Pandey also said that the Budget proposal of setting up dispute resolution mechanism for smaller taxpayers with less than Rs 10 lakh tax demand and making the Income Tax Appellate Tribunal (ITAT) faceless would ease compliance and make the tax administration efficient, eventually leading to higher revenue growth.

Referring to clarifications issued in the Budget related to equalisation levy on digital transaction involving Indian customers and non-resident companies, Pandey said that the aim was to make clear that if any digital transaction was taxable under income tax laws then the companies would have to pay the same instead of choosing between paying income tax and equalisation levy. The Budget last year had proposed a 2% equalisation levy on non-resident internet companies providing services in India.

Additionally, the finance secretary said that while the government would keep an eye on inflation, a possibility on the back of higher spending planned for next fiscal, the belt-tightening for the next fiscal was not an option given the economy needed the virtuous cycle of growth to start.

Source from: https://www.financialexpress.com/budget/union-budget-2021-tax-targets-achievable-with-just-compliance-improvement-no-extra-burden-on-taxpayers-likely-finance-secretary/2186356/

CLOSE
CLOSE