In a country like India where out of 138 crore people, only 1.5 crore people pay income taxes, any tax relief would only benefit a particular section and therefore it is important to have a policy beneficial to everyone, Finance Secretary Ajay Bhushan Pandey told Moneycontrol in an exclusive interview.
"The latest figure is that more than 1,10,000 cases have opted for Vivad Se Vishwas scheme. The total disputed amount that is going to get settled will be more than Rs 95,000 crores. We expect to get many more cases now onwards, with the extension of dates," Pandey said in the post-Budget interview.
He also said that the Goods and Services Tax (GST) collections in the last couple of months have improved because of systemic changes undertaken by the department of revenue, without having to increase tax rates.
Edited excerpts:
What was the thought behind not tinkering with income tax slabs in Budget 2021-22 in the backdrop of a pandemic?
This Budget was presented in a very extraordinary time. There was an opportunity for us to come out with a very reformed Budget which would be different from the earlier times.
On the taxation side, we have tried to focus on the processes, simplification, reduction of the compliance burden, and then garnering resources through voluntary compliance. So, these are the systemic changes that we have tried to introduce, whether it is an income tax or customs.
In order to raise resources, you don't need to increase taxes. In GST, we have seen that in the last few months that without increasing the GST tax rate, the collections have improved.
In India, in a country of 138 crore people, only 1.5 crore people pay income taxes. Any tax relief will only benefit that particular section. Therefore, we need to have a policy that will benefit everyone and that is what has been done in this Budget.
I think one has to look from a point of view that tax rate is not the only way to get money and give relief.
Like you mentioned GST, the collections have been good in the last couple of months. How hopeful are you of being able to sustain this momentum going forward?
We are quite hopeful because we have made some systemic changes in the GST process, like the quantification of the input tax credit and invoice matching. What we have done is that the input tax credit is made known to the taxpayer. On the one hand, it is helping the honest taxpayer.
At the same time, it's trying to sieve out those who are trying to game the system, because the input tax credit is prefilled in the return.
Then the electronic invoicing system, and other changes like the ease of filing of returns; measures like targeted, and not the indiscriminate, action against the dishonest and making ease of doing business simpler for the honest... all these things together are leading to the improved collection.
This improved collection has not happened by increasing the GST rates.
The Central Board of Direct Taxes (CBDT) extended the deadline for filing declaration under the Vivad Se Vishwas Scheme till February 28. What kind of proceeds have you so far garnered from the scheme and what is the quantum of disputes you are looking to resolve?
The latest figure is that more than 1,10,000 cases have opted for Vivad Se Vishwas scheme. The total disputed amount that is going to get settled will be more than Rs 95,000 crores. We expect to get many more cases from now onwards, with the extension of dates.
In 1998, one similar dispute resolution scheme was brought in where the total amount of disputes settled was about a few hundred crores and the number of cases was in thousands. Another scheme was brought in 2016. There also we had received similar result, but this (Vivad Se Vishwas) scheme has got an overwhelming response.
What's your assessment of the overall targets set for FY 2021-22?
The targets are very realistic because we have done a lot of exercise on this. We have estimated that our nominal growth rate is going to be around 14.5 percent. We have shown tax revenue growth of 16.7 percent. As regards disinvestment, we have kept it at Rs 1.75 lakh crore. I think achieving this will be possible. It's not a conservative Budget, but a realistic one.
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