The government has introduced enough big bang reforms in the last two and a half years, and these will now have to be implemented, Revenue Secretary Hasmukh Adhia told BloombergQuint in an interview.
“Now what we need to do is consolidate these reforms. Benefit of demonetisation has to be garnered now; expand the tax net with all the data we have, we have to see that our revenues increase. And as far as GST is concerned, the biggest task is implementing it…We have to roll it out by July 1, 2017…and be able to get some better revenue..and also hassle free revenue from trade and industry.”
Finance Minister Arun Jaitley announced in Budget 2017 that tax rate for companies will be reduced to 25 percent—but only for those with an annual turnover of up to Rs 50 crore.
Adhia said that the government remains committed to lowering the corporate income tax rate for large companies as well. Tax incentives for MSMEs will meanwhile strengthen the sector and create more employment, he added.
The response to the government's ongoing Direct Tax Dispute Resolution Scheme has fallen short of expectations, the revenue secretary admitted.
“A lot of litigations are pending, and we will have to do something…I would frankly admit that the response (to the scheme) is not as we'd expected in the Dispute Resolution Scheme. We will have to analyse the data once more, see why litigations are happening, check the root of the problem, and solve it,” Adhia said.
In the Union Budget 2016-17, the finance minister had announced a scheme to resolve pending tax disputes at the CIT (Appeals) level. Under the Direct Tax Dispute Resolution Scheme, a taxpayer whose appeal is pending as on February 29, 2016 before the CIT (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment.
Expansion Of Tax Net A Priority
Expansion of direct income tax collections, especially personal income tax, hassle-free administration of direct and indirect taxes will be the priority of the revenue department for the next year, Adhia said.
GST Implementation By July 1
He remains confident that the new indirect tax regime will be implemented by July 1, 2017.
In the aftermath of demonetisation, several states were demanding higher compensation as they expect higher revenue losses. Adhia reiterated that the Centre has the option of borrowing from the market and levying cess on demerit goods for the sixth year.
BloombergQuint had reported on January 18 that the proposed cess on items like luxury cars, tobacco products and aerated drinks under the GST regime is likely to be extended beyond the first five years to bridge any shortfall in funds to compensate states.
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