The target for GST collection, however, has been lowered to Rs 11.47 lakh crore in the revised estimates of 2018-19, from Rs 13.71 lakh crore budgeted initially
The corporate sector will have to wait a little longer to enjoy a breather in corporate tax as the government is waiting for indirect tax collections via Goods and Services Tax (GST) to stabilise before lowering income tax rates for companies.
“The finance minister has promised that as the revenue collection, as in the GST goes up, he will rationalise the tax rate for the rest of the sector over the next few years,” Sandip Somany, president, Federation of Indian Chambers of Commerce and Industry (Ficci), an industry body, said after meeting Arun Jaitley.
The trade body had met the finance minister in the morning to “present the agenda for the next government”.
“We had fruitful discussions across wide range of subjects including taxation, job creation and other things that we should be doing as a country to increase industrial output. We also discussed various social schemes to help less affluent people which can be done as GST collections increase,” he told reporters.
Modi government had announced in the union budget of 2015-16, that the government intended to reduce corporate tax rate from the current 30 percent to 25 percent in the coming years, phasing out exemptions for the companies.
Acting on the same, it lowered the tax rate for micro, small and medium enterprises (MSMEs) to 25 percent, which had a turnover of less than Rs 50 crore, in 2016-17. The same was extended in 2018-19 to those MSMEs which had a turnover of Rs 250 crore.
After the move only 7,000 companies are in the 30 percent tax slab category, out of about 7 lakh companies which file returns.
The government had initially set an average target of over Rs 1 trillion GST collection per month in order to earn higher than Rs 13 trillion indirect taxes annually. The target, however, has been lowered to Rs 11.47 lakh crore in the revised estimates of 2018-19, from Rs 13.71 lakh crore budgeted initially. For 2019-20, the GST collection target has been budgeted at Rs 13.71 lakh crore.
The government, however, has been able to touch collection of Rs 1 trillion only during April and October (2018) and January (2019). While revenue in April was higher as businesses generally pay arrears for some of the previous months, mop-up in October was Rs 1 lakh crore due to the onset of the festive season.
The GST collection for the month of February was Rs 97,247 crore, lower than the amount collected in January. Between April and January, the government has collected Rs 9.71 lakh crore revenue from GST.Achieving the revenue collection target is crucial as it has a direct bearing on the fiscal deficit, which is a gap between government's revenue and expenditure.