We will Look at the Idea of Cash Trans­ac­tion Tax: Rev­enue Secy Has­mukh Ad­hia Deepshikha Sikar­war

The Economic Times - - Saturday Interview -

The tax depart­ment won’t ha­rass gen­uine tax­pay­ers, rev­enue sec­re­tary told and in an in­ter­view. He also spoke about the im­ple­men­ta­tion of the goods and ser­vices tax. Edited ex­cerpts:

day, many traders de­posit their ev­ery­day sale into the bank. If cash with­drawal tax is im­posed, they will say why should I de­posit if I have to pay tax when I with­draw it. We have to see. That of course is the log­i­cal thing to do. Idea is to limit the flow of cash in the econ­omy as much as we can but what should that num­ber be, when should we stop is for the depart­ment of eco­nomic af­fairs and RBI to take a view. How do we bud­get for it? Can we put a fig­ure to some­thing which is not cer­tain? Sup­pose we put Rs 50,000 crore in re­vised es­ti­mates and give this money to agri­cul­ture, health or ed­u­ca­tion and if money does not come, how do we tackle it? This is a dilemma. What­ever comes we will use it next year. You know the In­dian men­tal­ity--most of the re­sponse comes in the last mo­ment. That is what hap­pened in the case of for­eign black money, in the case of IDS scheme. So in PMGKY also it may come at the last mo­ment. So it’s any­one’s guess. We are sin­cere about our at­tempt to get as much tax as pos­si­ble with­out ha­rass­ing peo­ple. (The scheme ends on March 31.)

A vast ma­jor­ity of pro­fes­sion­als do not pay tax. How can they be brought into the tax net? We will have to do some­thing. Peo­ple have to come for­ward and com­plain. Peo­ple have to come for­ward and ex­er­cise their right. If an hon­est tax­payer is made to pay cash, then he must in­sist on pay­ing by dig­i­tal means or cheques. Now there is a fair amount of aware­ness. What a shock­ing fig­ure--76 lakh peo­ple show­ing in­come of over Rs 5 lakh or more, out of which 56 lakh are salaried.

The cor­po­rate tax cut to 25% cov­ered most com­pa­nies in terms of num­bers but the big­ger ones are out. Are you firm on the 2019 time­line for re­duc­ing their rate as well? De­pends on how much re­sources we have to give away with this con­ces­sion. The cost is too high. If we have to re­duce it by 1% for all the com­pa­nies, the cost will be Rs 18,000-19,000 crore. Ef­fec­tive tax is much less. Ninety-six per­cent of com­pa­nies have ben­e­fited from what we have done. All MSMEs (mi­cro small and medium en­ter­prises) are cov­ered by this, so their com­pet­i­tive­ness vis-à-vis large com­pa­nies also goes up.

Should our in­come taxes go up through broad­en­ing of the tax base, do you think the sur­charge on high in­comes could be rolled back? We don’t want to bur­den the same peo­ple who are pay­ing hon­est tax. Our at­tempt will be to broad­base the tax base and then to re­duce the tax bur­den over­all where pos­si­ble. There is a big per­sonal in­come tax surge bud­geted for next year. Are we ex­pect­ing a broad­en­ing of the tax base or more hon­est in­come dec­la­ra­tion? Both. Peo­ple who are pay­ing tax will also start show­ing more in­come. They know the gov­ern­ment is se­ri­ous about it. The gov­ern­ment is not go­ing to stop in its drive to get black money out, so peo­ple have be­come very se­ri­ous about it. Let’s show some amount if not full amount.

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