05 February,New Delhi
Hasmukh Adhia, Secretary (Finance and Revenue), Ministry of Finance said on Monday that the structural reforms implemented by the Government including path-breaking initiatives such as demonetisation, sustained campaign against tax evasion and the implementation of GST have resulted in greater tax compliance and hopefully shall garner higher revenues for the Government.
During the post budget interactive session organised by Industry body Confederation of Indian Industry (CII), Dr Adhia said that the benefit of reforms is becoming visible in terms of an increase in personal income tax collections and the prognosis for the next two years is bright as far as revenue collection is concerned. Dr Adhia also cautioned that the Government machinery is keeping a track and notices have been sent to those with disproportionate bank accounts in relation to the income tax returns.
While acknowledging the need to reduce corporate tax rate across the board, Dr Adhia said that the tax base under income tax would have to go up to avoid revenue loss and with the 25 percent tax rate now prescribed for companies having a turnover of upto 250 crores, almost 99 percent of the companies would be covered into this slab, resulting in better tax adherence and compliances. He further stated that investment in new manufacturing units and Foreign Direct Investment has been facilitated by the recent tax rate reductions.
On long term capital gains tax coexisting with securities transactions tax (STT), Dr Adhia said that STT is a small amount and does not form a big component of the overall cost of holding the securities. Besides, the sharp drop in the sensex is not a result of LTCG alone as the stock market across the world is on a tailspin due to the global market forces.
Dr Adhia further stated that revenue is expected to further increase considerably, in the light of the e-way bill, which shall be introduced in due course with the system fully enabled, and with the invoice matching mechanism under GST. Dr Adhia also stressed on the use of technology to remove anomalies in the system to avoid tax evasion.