We remain optimistic about targets for upcoming fiscal year: Tarun Bajaj

We will have higher revenue, but also our expenditure would exceed the revised estimates in the Budget, said Bajaj

Economic Affairs and Revenue Secretary Tarun Bajaj says the government should be able to weather the storm caused by rising Covid cases, given the availability of vaccines. He tells Dilasha Seth economic activities are unlikely to be affected due to Covid this time. Bajaj talks of fuel taxes, the equalisation levy and the faceless tax system, among other issues. Edited excerpts:
 
Tax collection this year has exceeded the revised estimates by a significant margin. Will it bring down the Centre’s fiscal deficit from 9.5 per cent of GDP for 2020-21 as estimated under the revised estimates in the Budget?

 
Yes, revenue will be more, but we have pushed refunds also though their pace generally slows in the last two months of the fiscal year. We have refunded over Rs 76,000 crore more during 2020-21 compared to the previous year's. Figures are still coming in. We will have higher revenue, but also our expenditure would exceed the revised estimates in the Budget. But I am hoping the fiscal deficit would be slightly lower than what was estimated but it is difficult to say to what extent. It will become clear in a few days.
 

The United Stated has threatened India with retaliatory tariffs against the 2 per cent equalisation levy on non-resident ecommerce operators. What will be India’s stand?

 
The issue of taxing the digital economy is being discussed by the G20. We are expecting a solution by the middle of this year. Not just India, some other countries have also introduced the levy. The crux is that it is unfair that we tax the country’s residents, but foreign digital players escape it on the same income they earn here. So we will handle the retaliatory tariffs proposed by the USTR (US Trade Representative). The Department of Commerce will talk to the USTR.
 
Where is the Bill on crypto-currency stuck? What is causing the delay?
 
Some more discussion is required before it is finalised.

 
With Covid cases rising again, do you see any upside risks to the growth targets and overall economic recovery?
 
I don’t see economic activities being affected much due to this. We should try to handle the pandemic through vaccines. This time lockdown will not be an answer. Earlier it was a different story. Now we are prepared to handle the virus. I think it is a worry as to why the cases are going up, but we should be able to weather the storm. The impact is not visible from the daily figures of excise duty and goods and services tax. So we remain optimistic about the targets for the upcoming fiscal year.

 
Shall we see an excise duty reduction on fuel? Has the Centre had any discussion with states on reduction in value-added tax (VAT)?
 
The prices have started coming down a little bit and the previous year was a resource crunch for both the Centre and the states. But the question arises, what if we cut excise duty and states increase VAT? So it has to be a coordinated action.
 
Will the revenue department file a review petition in the Supreme Court on its order that rejects the plea on treating payment for software to overseas companies as royalty?

 
The team is in consultation with lawyers on what to do with that.
 
How is the faceless assessment scheme performing so far?
 
Of the first lot of more than 58,000 legacy cases, the Central Board of Direct Taxes has issued final scrutiny assessment orders in over 45,000 cases completely through the faceless system, while of the 136,000 new cases, some 55,000 have been completed and final scrutiny assessment orders issued. In more than 94 per cent of the cases, the explanation of the taxpayer was accepted and no additional tax or penalty was imposed. Only in about 1,600 cases, concealment or an understatement of income was established and an addition of income has been made.