Fears regarding revenue loss for State governments and higher tax burden on tax payers under the proposed Goods and Services Tax are not justified as adequate counter measures have been provided, said Shaktikanta Das, Revenue Secretary, while addressing a CII meet on the Budget.
Tax rates under the proposed Goods and Services Tax should not be higher than the prevailing rates as input credit is available across the value chain. Even inter-State supply of goods has been addressed through the IGST mechanism, he said.
No hike in GSTWhile the GST rates are yet to be finalised, it will not be higher than the prevailing taxes where manufactured goods attract 24-26 per cent tax including a basic excise of 12 per cent and Value Added Tax of 12 to 14 per cent, he said. The Centre is committed to shifting to GST from April 1, 2016, he said.
On revenue loss, he said similar concerns were expressed when VAT had replaced the general sales tax regime. But for the entire country, the VAT compensation paid out was just about ₹33,000 crore. Also, provision has been made for compensation over a five-year period and to specifically support manufacturing States with a 1 per cent origin based tax with a two-year sunset clause. Also, GST is a tax buoyant measure in the long term, he said.
He said the underlying principle of the Budget was reviving the investment climate and increasing employment generation.
One key element of attracting investments was the taxation policy and easing tax administration.
The Budget announcement to bring down corporate tax in stages to 25 per cent from 30 per cent is to enhance competitiveness of Indian industry and attract investments.
This cannot be done in a single year as exemptions have to be phased out and revenue loss taken into consideration, he said.
The road map for doing away with exemptions will be finalised this year. This will remove one major hassle as tax litigations largely centred around exemptions and concessions, he said.
The reduction in corporate tax will benefit small industries as the MSME units do not have the ability to avail themselves of tax concession measures.
On the necessity for a new law regarding black money, he said the Centre will introduce a Bill in the first leg of the current Budget session.
This will plug loopholes regarding foreign assets and provide for freezing equivalent value of assets within India.
The Swiss Government has agreed to negotiate with India on Automatic Exchange of Information and validate information on banking and non banking data.
While India had received information from the French Government on 628 account holders in HSBC Bank, the Swiss view it as ‘stolen data’ and refused to share information.
But following a meeting by an Indian delegation last October when it was clarified that some of the names also have come out as part of an independent investigation, the Swiss Government has agreed to share details in such cases, he said.
Venu Srinivasan, Chairman and Managing Director, TVS Motor Company, welcomed the Budget announcement to set up a Micro Units Development Refinance Agency, a financial institution to support small units.
MSMEs generate 40 per cent of organised employment and account for about 40 per cent of exports.
The sector needs to be nurtured with a “light touch and hassle free environment.”