New Delhi: Finance secretary Hasmukh Adhia speaks about some of the important tax proposals in the budget and the implementation of the goods and services tax at the CNBC-TV18 Mint Budget Verdict conclave.
On disappointment of the salaried class with the budget proposals:
Many salaried employees, especially at the lower level, do not get transport or medical allowance or get only one of these. They will benefit from the budget proposal of introducing a standard deduction. It will also benefit pensioners. It is not significant but there is a marginal tax relief. The impact of the 1% cess on a middle class taxpayer will be much less than the relief we have given.
On long-term capital gains (LTCG) tax :
We have protected the interests of the retail investors by giving an exemption for gains up to Rs1 lakh. The whole idea of levying LTCG is that we should not leave one class of assets absolutely without any taxation. When that happens, that particular class of assets becomes very attractive. Even when valuations are not correct, people rush to invest. And this is a potential risk for the economy.
The stock market gains have been very good. If you are getting 15% gain from capital markets every year, why not give a small portion in tax? Why should we not tax a class that is investing in stock markets?
On continuation of securities transaction tax along with LTCG tax:
Even today, with 10% LTCG tax being levied on listed equity stocks, the taxes are still lower compared to immovable property or debt investment. People have realized Rs3.76 trillion in capital gains in the last fiscal. If the buoyancy continues, we should get around Rs40,000 crore but because it will be the first year and the investments are grandfathered, we expect half of this to come in.
On e-way bill deferment and impact on goods and services tax (GST) revenues:
We have implemented GST very smoothly. This is because of our willingness to change and the flexibility shown by the GST Council. We had said we will start e-way bill by 1 February. Sixteen states started it for intra-state trade also. The system was overloaded leading to technological glitches. We admitted it straightaway. We did not want the industry to wait for 10 minutes to generate an e-way bill. We want this to happen in one minute. We called all states and decided to extend the trial phase. If GST has to be different from the previous VAT regime, we need e-way bill and invoice matching.