FM cites higher tax mop up to dismiss economic slowdown fears

Dismissing concerns of slowdown due to demonetisation, Finance Minister Arun Jaitley today said both direct and indirect tax collections have shown robust increase during the April-December period, indicating uptick in economic activity including manufacturing.
He said direct tax collection was up 12.01 per cent at Rs 5.53 lakh crore in April-December 2016 as compared to revenue in the year-ago period, while indirect tax receipts soared 25 per cent to Rs 6.30 lakh crore.
Giving the break-up, he said excise collection was up 43 per cent at Rs 2.79 lakh crore, while service tax rose 23.9 per cent to Rs 1.83 lakh crore in the first nine months of the current fiscal. Customs duty receipts were up 4.1 per cent at Rs 1.67 lakh crore.

Indirect tax collection in December was up 14.2 per cent year-on-year, he said.
During the month, which witnessed the demonetisation process, the excise collection was up 31.6 per cent, Jaitley said, adding that this category is directly linked to manufacturing.
Service tax receipts in December were also up 12.4 per cent. Customs revenue dipped 6.3 per cent as gold imports came down.

"Tax collection data is real and not an estimation," Jaitley said, while dismissing apprehensions of slowdown in following currency squeeze post demonetisation.
When compared with tax collections in November, indirect tax receipts in December 2016 were up 12.8 per cent, he said.

"Since there has been a considerable debate in the public space as to the impact of currency squeeze in the months of November and December, the data of these two months becomes relevant," Jaitley said.
But with reforms in allocation of natural resources, that
underwent a change, he stressed.
"It's image that it's a corrupt society... We were able to substantially write it off if not completely," he noted.
Jaitley said use of Aadhaar unique identification number has become a launching pad for rationalisation of subsidies by directing it to the needy rather than the undeserving.
He is clear that the goods and services tax (GST) will unify India into a single market, with industry getting input credit at every stage and reduced cost.

"It will be a more efficient system that will reduce tax evasion and reduce harassment. Together with demonetisation, it will lead to squeezing of the informal economy and more taxes, which means more reasonable rates of taxation," he said.
"If you combine the two (GST and demonetisation), We create a new normal. Post demonetisation, generating cash will be difficult, spending that cash will be difficult as transaction will be captured," Jaitley said, adding that the government wants to attract people to join the taxation base.