The government has re-calibrated and fixed the direct taxes collection target for this financial year at Rs 13.35 lakh crore, a task that the CBDT chief said is difficult but achievable. He also said that the government can only think of further "lowering" corporate tax rates once the exemptions and deductions in this sector are phased out.
"In the last revised estimates, our target (for 2019-20 financial year) was fixed as Rs 13.78 lakh crore which appeared to be rather unrealistic because it was showing an increase of almost 24 per cent year-on-year. This is the submission we made while budget deliberations were going on," CBDT Chairman Pramod Chandra Mody told PTI.
"I am happy to say that the government in its wisdom was appreciative of that and they went by the actual collections which happened last year. And consequent to that the budget (collection target for direct taxes) has now been fixed at Rs 13.35 lakh crore," he said. This translates, Mody said, to about 17.5 per cent increase year-on-year.
Now, this (current target) has to be seen in the perspective of the historical growth rate in collections in the past three years..., the CBDT chief said. "This gives me lot of hope and confidence that we will be able to achieve the 17.5 per cent growth that we are mandated to achieve. It would be a difficult task but not totally unachievable," he added.
The I-T department had collected Rs 11.37 crore under the direct taxes category during the last fiscal of 2018-19 and the finance ministry had initially set the target for this year at Rs 13.80 lakh crore.
"With the kind of push that has been given to investment and growth (in the latest budget), I am sure that the economy would do well and consequently the revenue collection will also do well," he said.
The direct tax collection bucket comprises personal income tax, securities transaction tax and corporate tax and the targets in this context are set by the Union finance ministry in consultation with the Central Board of Direct Taxes (CBDT) that frames policy for the Income-Tax Department.
Asked about corporate tax rates, Mody said the budget presented by Finance Minister Nirmala Sitharaman last week has brought in almost all the companies in the lower tax net.
"The question is that these (corporate tax rates) are linked to certain exemptions and deductions which the corporate entities are availing. The stated government policy is that the exemption and deductions get phased away over a period of time and coincidentally that time has been given as about 5-10 years."
"So, perhaps in that space once exemptions and deductions go away, we can definitely assume that we will have lesser corporate tax. Whenever exemptions and deductions make an exit, the immediate effect will be lowering of tax rates," he said.
In keeping with the government's promise of phased reduction of corporate tax, the latest budget widened the benefit of lower corporate tax of 25 per cent to companies with annual turnover of up to Rs 400 crore. This would cover 99.3 per cent of the companies in India and leave out only 0.7 per cent.