Budget has focused on tax administration: Dr Hasmukh Adhia
The Union Budget 2016-17 has sought to meet the challenges accruing from global headwinds even while enforcing fiscal prudence and taking steps to alleviate the plight of the dis-possessed in the rural areas following two consecutive years of drought. This Budget could be deemed as a credible one which would act as a medium of change. This was stated by Mr. Shaktikanta Das, Revenue Secretary, Ministry of Finance during the post Budget interaction in the CII National Council meeting.According to Mr Das, the striking feature of the Budget was the adherence to the target of fiscal consolidation. Changing the fiscal goalposts every year would have raised the issue of credibility which the government could not afford. Besides, the issue of debt sustainability is important as the government is conscious about the need to crowd in private sector investment.
Elaborating further on the subject, Mr Das stated that the revenue and expenditure numbers enunciated in the Budget are realistic and eminently achievable. The tax revenue target does not include the resources mobilized from compliance and dispute resolution. The sources of revenue, according to Mr Das, would be from four main sources viz additional dividend from Central public sector units, disinvestment and strategic sales, spectrum auction and tax arrears.
On the expenditure side, full provision has been made on account of the outgo on defence OROP. On the seventh Pay Commission, the expenditure outgo has not been fully quantified as the report of the committee of secretaries which is set up for the purpose, is awaited.
Continuing on the reform areas in the Budget, Mr Das referred to several reform areas of utmost significance, including reforms in the road transport and passenger segment, Code on resolution of financial firms, encouraging Central PSEs to sell individual units which have turned unviable, allowing 49% FDI in insurance on an automatic basis etc.
On banking sector reforms, Mr Das underscored the importance of addressing the problem of stressed assets of banks. He said that the budget has, at the outset, set aside Rs. 25,000 crore for recapitalization and more would be provided, if required. Incentives for creating asset reconstruction companies were also dwelt upon.
Finally, Mr Das hoped for early implementation of GST which would take India to the orbit of 8-9% growth.
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Speaking at the same session, Dr Hasmukh Adhia, Revenue Secretary, Ministry of Finance said that unlike earlier when tax policy used to focus on tax rates, this year there has been a lot of focus on tax administration. The focus of the Budget has been on growth and implementation, he added. He then elaborated on some of the tax measures taken by the Budget.
He said that many duties have been changed with two objectives in mind - removal of duty inversion and giving some protection to domestic industry. Further, tax policy has been designed to promote a growth-oriented strategy. For example, the Budget proposes a lower tax rate of 25% for new manufacturing companies. In the construction sector, builders have been allowed 100% deduction of profits on low-cost housing projects while additional deduction of interest has been allowed to buyers of low-cost homes.
Elaborating on the improvements in tax administration, he said that penalties have been reduced. Penalties have been reduced from 100 to 50% and from 300% to 200%. The category of 300% penalty has now been abolished. Defaulters have been divided into three categories with minimum penalties being imposed on the smallest. He also talked about expediting dispute resolution, given that three lakh appeals are pending involving an amount of Rs 5.5 lakh crore. By removing the DDT on SPVs connected to ReITs and InVITs, he has accepted a long pending recommendation of CII.
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