New Delhi: Finance Minister P Chidambaram on Tuesday parried questions on moderating taxes in the next budget even as direct tax collections this fiscal are set to cross Rs300,000 crore, a 12% jump over budget estimates.
“Let me recall what I said. If voluntary compliance (in taxes) increases there is a case for moderation. That does not mean the case has been accepted. You make a case for moderation instead of writing imaginary stories,” Chidambaram told a press conference.
He was replying to a question on his earlier statement that there was a case for moderation of taxes if voluntary compliance raised tax collection. During April-December period, direct tax collections after paying refunds crossed Rs2,05,000 crore. registering a growth of 42.36%.
For the first time, direct tax collections would surpass indirect tax collections, Chidambaram said.
Corporate tax collections grew 39.84% to Rs1,27,683 crore, while personal income tax, including security transaction tax, fringe benefit tax and banking cash transaction tax, grew by 50.06% to Rs77,380 crore.
Chidambaram also announced setting up a Directorate of Human Resources for direct tax department aimed at restructuring of department for enhancing voluntary tax compliance.
On whether growth in public expenditure led to hike in fiscal deficit, Chidambaram said: “Our fiscal and revenue deficit is much lower than projected, much better than last year. Actually we have got primary surplus.”
Fiscal deficit during April-November period stood at Rs96,274 crore, 63.8% of the annual target of Rs1,50,948 crore or 3.3% of the Gross Domestic Product.
In comparison, fiscal deficit during April-November 2006-07 was 72.8% of that year’s budget estimate, according to data released by Controller General of Accounts.
Meanwhile, revenue deficit rose to Rs69,974 crore or 97.9% of the budget estimate as against 99.7% during the same period in the last financial year.
Chidambaram also said that tax-GDP ratio would exceed the budget target of 11.8%.
Referring to the future roadmap, he said implementation of Goods and Services Tax by April 1, 2010 could also give a new momentum to tax collection just as in the case of value-added tax.
He said government has taken various steps to make the tax department customer friendly. Tax return preparers (TRP) scheme, electronically filing of tax returns, payment of taxes and quicker processing of refund claims were aimed at encouraging tax payers to deposit tax voluntarily.
“The moral for the tax department is to emphasise on voluntary tax compliance,” he said.
While hinting at the bringing more transactions under annual information reports (AIR), he said: “We have not added anything new to the AIR. I am told that there is some progress. We would continue to rely on AIR.”
He, however, refused to comment when asked for his views on allocation of spectrum in telecom sector.