Hyderabad, Feb. 16 Finance Minister Nirmala Sitharaman has asserted that the Centre is firm on formalising the economy and has ruled out giving exemptions on tax on prize monies and asked the industry not to ask for TDS concessions.

Addressing a gathering of industry bodies on the Budget 2023-24 here on Thursday, she appealed to them to explain to their members the methods and measures being taken up by the government to formalise the economy.

“If you start asking for TDS concessions, this country will never get formalised. (A number of) transactions happen, but we don’t know whether the money goes with the TDS. We should know who is the giver and who is the taker,” she said.

Asserting thattax on prize monies is not something new or an additional tax, the Finance Minister said that someone has to pay the tax.

“If you are so concerned about the startups, you must give that additional 30 per cent (which will be cut as TDS) to them,” she said.

Answering a query on deferred payments to MSMEs, Finance Secretary T V Somanathan said that there was a significant Budgetary announcement that proposed changes to the Income Tax Act to ensure payments to MSMEs.

“An amendment is being brought to the Income Tax Act by which if payment is not made to an MSME then that amount can’t be deducted by the paying organisation until the payment is made on time,” he said.

“If they don’t pay on time, this expense will be disallowed until such time,” he said.

No borrowings directly from abroad

Answering a question on whether the government would borrow directly from abroad, the Finance Secretary has ruled out the idea.

“The answer is, no. There are some benefits, but there are also some negative effects, which include exposure to risks. In a volatile world, even central bank money can be stopped by a foreign country for political reasons. This is not a very simple question of yields alone,” he said.

“We are already open to foreign portfolio investment in rupee-denominated securities. Foreign money is coming in the rupee-denominated securities,” he said.

No differential input tax for EV buses

When an EV industry representative asked for reduction of input tax rate from 28 per cent for certain components that go into EV buses, he said it goes against the idea of GST.

“The GST doesn’t work on an end-use principle. It’s very difficult when there’s a common input that goes into an electric and non-electric vehicle. It can be recipe for a lot of evasion and administrative harassment,” he said.

“If it (input) is something exclusive, the GST Council might be able to look at it,” he added.