Govt neutralises tax impact of 1st yr of DTC regime

Government today said its proposals on withdrawing profit-linked exemptions in Direct Taxes Code will bring in over Rs 50,000 crore and make the exchequer little bit richer despite moderation in tax rates.

"Government would bring Rs 55,000 crore worth revenue within the tax net through withdrawal of profit-linked tax exemptions...," Revenue Secretary Sunil Mitra said here today at a CII seminar on DTC.

Once the DTC is in place, the profit-linked tax exemptions will go.

With this, the revenue impact in the first year (2012 -13) of implementation of DTC will be marginally positive, as per projections made by the finance ministry .

Mitra said with moderation corporate tax rates from present 33.2 per cent to 30 per cent in DTC, the government is projected to loose Rs 38,829 crore in 2012-13.

The corporate tax rate would continue to be same at 30 per cent but surcharges and cess would be withdrawn. The surcharge and cess collection in 2010-11 is projected to be Rs 25,000 crore.

From raising of income tax exemption from Rs 1.6 lakh to Rs 2 lakh, the government is expected to lose Rs 14,343 crore in 2012-13.

Meanwhile, government's indirect tax collection in the first five months (April-August) of the current fiscal has gone up by 45 per cent and the direct tax collection has gone up 20 per cent over the corresponding period last year.

"Part withdrawal of stimulus has given boost to indirect tax collection," Mitra said.

As part of the partial withdrawal of stimulus, the government raised excise duty on non-petroleum goods from 8 per cent to 10 per cent.

Government has also increased excise duty on petrol and diesel and re-introduced 5 per cent customs duty on crude.

Customs duty collection had jumped by 70 per cent in the first five months.