Tax kitty to exceed Budget estimate, says Jaitley

While some states have complained of declining tax revenues due to demonetisation, the Centre is hopeful of exceeding its Budget Estimates (BE) for 2016-17 in both direct and indirect tax collections.

It has reiterated the decision to advance the Budget presentation date to February 1, despite objections.

“We will end this year with higher revenues for both direct and indirect taxes compared to the estimates,” said Finance Minister Arun Jaitley after the Goods and Services Tax Council meeting and pre-Budget consultation with state counterparts.

The states raised concern over declining revenues and sought relaxation in the Fiscal Responsibility and Budget Management (FRBM) limit, beside central support to revive labour-intensive industries.

To a query, Jaitley said the Reserve Bank (RBI) would remove the current restrictions on cash withdrawal after assessing the situation. He ruled out a change in the conditions barring anyone other than nonresident Indians (NRIs) and those returning from abroad from depositing the junked notes in select central bank branches.

“Actions are taken in phases and so are relaxations,” he said on when the cash withdrawal restrictions could be ended. Collection Indirect tax collections — central excise, service tax, customs — were up 26.2 per cent in the April-November period (first eight months of this financial year) at ~5.52 lakh crore, as against the full year’s target of 10.8 per cent. Excise duty collections rose 43.5 per cent in the first eight months (April-November) of 2016-17 to ~2.43 lakh crore, against the BE of 12.15 per cent rise. Service tax collections made the kitty richer by 25.7 per cent at ~1.6 lakh crore in the eight months, against the 10 per cent projected in the BE. Customs collections rose by 5.6 per cent at ~1.48 lakh crore in the first eight months; the BE had projected 9.78 per cent more in FY17. Till December 19, the net increase in direct taxes was 13.6 per cent after factoring in the refunds, already higher than the Budget target of 12.5 per cent. Growth in corporate tax collection was 8.75 per cent till December 19, against the BE’s 9.04 per cent for the full year. Personal income tax yielded 23.9 per cent more till December 19, against a BE rise of 18.1 per cent. FRBM Most states pressed for relaxation in FRBM legal limits. Jharkhand sought it by one percentage point, as did Andhra, from the current year’s fiscal deficit limit of three per cent of GSDP.

Delhi finance minister Manish Sisodia said his revenue fell 24 per cent last month. However, Haryana (where the Bharatiya Janata Party also rules, as at the Centre) said tax revenues remained steady, “the same as last year, rather better. There has been no visible adverse impact of demonetisation”, said Abhimanyu, finance minister. Budget To a query regarding opposition parties demanding postponing of the Budget presentation date due to the coming state elections, Jaitley said, "They say the popularity of demonetisation is very low. Then, why are they worried about the Budget?"

He said the reason behind advancing the presentation date is that actual expenditure must start from April 1, when the financial year begins.

To someone asking if the Budget for 2012-13 had not been postponed due to state elections, he said, "This is not a tradition every time. Immediately before the Lok Sabha elections, an interim Budget is presented. This is a constitutional necessity."

Chief Election Commissioner Nasim Zaidi said various political parties had represented on the February 1 presentation of the Union Budget, while the poll campaign was still on in five states. "The Commission is examining this representation," he told reporters.

The Congress, Left parties and Samajwadi Party are among those which have written to the EC. Congress spokesperson Ajoy Kumar said the Centre should present a vote-on-account and a full Budget later.

Communist Party of India (Marxist) chief Sitaram Yechury said an ‘early Budget’ was a bad idea, as full data would be there only for the financial year's first two quarters. The Economic Survey coverage would be likewise. Such a Budget-making exercise was bound to lead to “looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies”.