P C MODY CBDT chairman

“DOING AWAY WITH EXEMPTIONS AND DEDUCTIONS HAS BEEN THE STATED POLICY OF THE GOVT; IT ALSO GOT REFLECTED IN THE CORPORATION TAX CUT”

Despite 40% of the full fiscal year’s collection target falling on the remaining two months of 2019-20, Central Board of Direct Taxes Chairman P C MODY tells

in a post-budget interaction that he is optimistic. Edited excerpts:

Though the direct tax collection growth target for this fiscal year has been scaled down to 2.9 per cent, from 17.3 per cent, isn’t it still high, considering that growth is a negative 5-6 per cent so far?

There is a lot of realism in fixation of target. A three per cent rise is definitely achievable. Historically, the last quarter of any fiscal is where your highest collection comes. These stand at~7.4 trillion today.

But, this means you need to still achieve 40 per cent of the current fiscal’s target in two months. Besides, advance tax collection might also be lower due to the revisions on account of corporation tax cuts.

We have already factored that in. We will match up with the final growth rate and I am confident of meeting my target. The dispute resolution scheme announced in the Budget — ‘Vivaad se Vishwas’ — will contribute to that.

Isn’t the next fiscal year’s target of 12.7 per cent growth again unrealistic in some sense?

With the manner in which we are using data analytics and artificial intelligence, the targets are very realistic. More reporting by entities of the financial transactions of taxpayers and increasing synergy with the CBITC in terms of exchange of information would definitely lead to more compliance.

The biggest disappointment for the markets was the quiet on LTCG (long-term capital gains). Did that figure in your pre-budget discussions?

That was absolutely an unrealistic assumption to make. World over, capital gains is liable to tax. What was the big issue on that? You can expect the moon every time but...( laughs).

But, LTCG is not a big contributor to revenues.

It is not about what the government is getting from a particular head of income. What is important is that in the general scheme of things, what ought to be taxed, ought to be taxed. Contrary to the objective of simplifying the personal income tax regime, the Budget announcement has made it much more complex. Unlike now, a new return filer might need to seek professional help to figure which regime is more beneficial.

That is a mis-impression. On the contrary, if you do not have exemptions or deductions to avail of, it needs a simple calculation of what your income is from different sources, calculating the tax at the prescribed rate, and you’re done with it. It’s only when the issue of exemptions and deductions come that the whole confusion starts — whether I’m entitled to it or not and to what extent. So, doing away with exemptions and deductions has been the stated policy of the government; it also got reflected in the corporation tax cut. The same thing has been carried over here. We are essentially looking at a simplified, straight, lean, simple structure for taxpayers to comply with. Besides, if you look at it from the context of tax disputes, they are essentially hovering around these exemptions and deductions.

With this, will people not move away from buying insurance?

Certainly not. On the contrary, with higher disposable income in their hands, people can take own call on what they want, which instrument they would like to go for.