New Delhi, Aug 12: Better corporate performance and more formalisation of the economy will generate robust tax revenues and help improve tax-GDP ratio in the current financial year, revenue secretary Tarun Bajaj said on Wednesday.
Gross tax-to-GDP which was 11% in FY19, fell to 9.9% in FY20 and marginally improved to 10.2% in FY21 (partly due to decline in GDP) and is envisaged to be 10.8% in FY22. “We should see a better tax to GDP ratio without actually increasing the tax rates,” Bajaj said addressing industry body CII.
The governments’ gross tax collections (after refunds but before devolution) stood at Rs 5.31 lakh crore in Q1FY22, 97% higher than receipts of Rs 2.7 lakh crore in the Covid-affected Q1FY21 and 33% higher than the tax receipts of Rs 4 lakh crore in Q1 of FY20.
Despite the Covid-19 pandemic, the monthly goods and service tax (GST) collections have been over Rs 1 lakh crore in the past 10 months (except in May). “Using technology is helping us in getting more taxes. But, I still feel that it is a cat and mouse game that is going on in my department, where I keep running after these mice, and I don’t see that is the answer…..the answer should be systemic,” Bajaj told industry leaders.
Acknowledging that high GST rates are impacting the automotive sector, the official said that the GST Council might look at solutions to bring down the rates, take out certain items from the tax-exempt category and correct the inverted duty structure.
Seeking investment from private sector, Bajaj said, “I don’t see private investment happening that much… for a sustained and long-term growth of the economy we want you people to come forward to invest, manufacture, start services and please tell us what is it that you require from us.”
Last week, the Parliament approved ‘The Taxation Laws (Amendment) Bill, 2021’ that seeks to amend the Income Tax Act to effectively withdraw tax demands made by India on 17 firms including Vodafone and Cairn Energy, on the capital gains from deals prior to May 28, 2012. The move was aimed at placating investors by stressing that India is offering a stable tax regime.
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