I don’t want to tinker with my tax every year, that’s not good, says Tarun Bajaj.
Revenue Secretary says that if the tax base was wider then it would have been much easier for the government to give relief to the people Tarun Bajaj, noting that four crore people do not file returns though the tax department does get some TDS collection in their account. With the rationalization of large customs duties and settlement of corporate tax, the government hopes to complete some of the pending reforms in personal income tax and GST, creating a stable tax regime for the next decade. Part:
How do you respond to rating agencies’ concern about the lack of new revenue ideas in the Budget?
The only new tax we have is the crypto tax. I don’t know how much it will bring but the tax regime has been told. We’re expecting that as the economy recovers and GDP continues to grow, so should revenues as capex begins to rise.
We are also better positioned on both direct and indirect taxes to ensure compliance and obtain information about taxpayers. This budget introduces few clauses – If a person has not filed his return even for a year and has TDS (tax deducted at source) of 50,000 in a year, then TDS will be doubled. If you receive a profit from a company that claims it as a business expense, it must be added to the recipient’s income. We have taken care of stripping bonuses, and dividends, tapped by high-income groups and corporates. So, we are seeing which lane the taxpayer is using and as soon as we close that lane, he takes another lane. Whatever information we have, and are sharing with the taxpayer because we have no intention of surprising or troubling him, our revenue should be fine. If you ask me what the new tax is, I don’t want to tinker with my tax every year. This in itself is not good and is complained about. I cannot get my tax policy set by rating agencies. Earlier he said that we are not giving money directly to the people. I used to tell them, ‘You say I’m worried about my fisk, [but] Once my fisk is gone, you’ll say, ‘Fisk, fisk, fisk!’ Now they are talking about borrowing and fiscal deficit.
India’s tax-to-GDP ratio has stabilized. Do we have a medium-term target and strategy for expanding the tax base?
We were at 9.88% in 2019-20, 10.11% in 2020-21. This year, I wouldn’t be surprised if it reaches 11%. it’s important. Tax-to-GDP cannot grow by 5% in a year. Compared to similar countries, it is not good and should improve, no doubt. Compliance is an issue… But now, we have a lot of information and we are facilitating it to come within two years to pay your taxes. So, I think things should change in the next few years. The Income Tax Department is contemplating where to track the expenditure which can be compared with the income. Provisions like TDS on luxury cars above Rs 10 lakh are in place to ensure that people know we know. There are about four crore people in this country who do not file returns, but we collect TDS from them on anything. it’s a habit [of not filing returns], It is easier to give relief to people if the base is wide. When I look at this year’s return, it should improve this year… because we have got more revenue from personal income tax. While the rich would have paid more, I imagine others would too.
Would you say that the exercise of customs rationalization has been accomplished to a great extent?
We did a lot of cleaning this year. As it stood, our law set a tariff rate that says a 30% tax, so people read it as a 30% levy. But then there is a notification where we say 10% tax and also give some exemption. We have rationalized all of that. Some duties that were not relevant, such as those on floppy disks and pagers, are removed. Some exemptions have existed for 30 years, which we want to continue but have reduced the tariff rate. On other items, where exemptions are required, we have let them go after consulting the industry and crowdsourcing. Whatever we do not produce in India and our raw materials – gems and jewellery, chemicals, fuels, our exporters continue to exempt or charge for embellishments like buttons, and even some electronics like camera lenses has reduced. Some changes will continue to happen based on the evolving trends.
What did the FM mean when he spoke of the aspiration to meet some of the challenges that still remain in the GST regime?
[high] The GST collection data mentioned by the Finance Minister has come not only because of the economy, but also because of a lot of technology, policy and other reforms. This will continue on the IT front as we have a lot of data. We have arrested over 600 people since November 2020, as we now know [evaders] And when we check, they acknowledge the problem. We have reached the level of technology where we are able to catch up. The second aspect is basically saying that there is a need to rationalize GST and if you are able to do that in the next one year, if we have the will to do so, we will put the taxation portion in order. On customs, corporate tax, we have already done a lot. On personal income tax, some further tinkering may be required. So once we’ve done that, we can leave and we’re at home. Then we can try to implement it for the next decade and have a stable tax regime that we are very particular about.
Here petroleum prices are on hold, even though they have risen globally. Do you understand the need for another round of excise duty cuts?
let us see. The Economic Survey estimates $70 to $75 a barrel. If it sticks around that, we can live with it. When we subtracted the fee, it was $83 or $84 and now it’s $88. A lot of geopolitical issues are active and once they are resolved, it should help.
,