 "Tax, GST, I-T, income tax, taxes")
The finance ministry said on Saturday the threshold for the reduced corporation tax rate of 25 per cent on companies earning up to Rs 50 crore, announced in the Budget for 2017-18, might be 2015-16. This means even if these companies grow bigger in subsequent years, the lower tax rate would continue to apply for them.
Revenue Secretary Hasmukh Adhia said at the Business Standard Budget Round-table that a clarification regarding the year on which the reduced corporation tax rates would be frozen for small and medium enterprises would be given soon. “The criteria of Rs 50 crore turnover is frozen,” Adhia said.
Asked whether the Budget announcement would incentivise companies to remain small, Adhia said it would not. “Even if the turnover becomes higher in subsequent years, the reduced rate of 25 per cent would be applicable to them and not 30 per cent,” Adhia said.
Besides Adhia, Finance Secretary Ashok Lavasa, Central Bureau of Direct Taxes Chairman Sushil Chandra and Central Bureau of Excise and Customs member S Ramesh were part of the panel which spoke at length about the various Budget proposals and what they meant for various interest groups.
Around 96 per cent of companies in the country have less than Rs 50 crore annual turnover. According to data for assessment year 2015-16, there are 694,000 companies which file returns, out of which 667,000 companies are in this category.
At the event, Adhia said the government would consider whether to roll back the excise duties on petrol and diesel if crude oil reaches $60-65 a barrel. “We could consider the rollback of excise duty on petroleum products if crude oil prices go beyond $60-65 a barrel. However, as of now, there is no crisis for us to consider an immediate rollback,” he said.
The Budget has assumed global crude rate to be in the range of $65-70 a barrel. In his Budget speech, Finance Minister Arun Jaitley had cautioned that international petroleum prices could rise, but also said shale oil could arrest them.
Answering a question, Lavasa said India Inc should not judge the “friendliness or unfriendliness” of the Narendra Modi government purely on the basis of a rise or reduction in corporate income taxes. “How corporate India views the government should not be seen through the prism of corporation taxes,” Lavasa said, adding the government had done a lot on ease of doing business and facilitating a business-friendly environment.
CBDT chief Sushil Chandra said, “The focus of this Budget is more on tax compliance. For persons earning Rs 50,000 per month, there is hardly any tax if they manage to avail a tax deduction under section 80CC of the Income Tax Act.” He added the Budget was aimed at widening the tax base while, at the same time, ensuring that honest taxpayers need not worry.
In his Budget speech on Wednesday, Jaitley presented a trove of data to press home the case of tax non-compliance among Indians. He had said as against an estimated 42 million people in the organised sector, only 17.4 million people filed salary income returns. “Of the 597,000 companies which have filed their returns for the assessment year 2016-17 so far, as many as 276,000 companies have shown losses or zero income.”
Jaitley juxtaposed the number of people declaring taxes with those buying cars and going on foreign holidays.
Speaking on the matter of non-compliance, Adhia said: “Isn’t it ironical that just 7.6 million people in India show a salary of Rs 5 lakh annually? And, of them, 5 million are salaried employees who in any case have to pay tax.”
Asked why the excise and service tax rates could not have been aligned with the goods and service tax (GST) rates in the Budget, CBEC member Ramesh said: “We did not want to do anything in such a short time as it could have unsettled GST.”
The GST Council had approved four rates (8 per cent, 12 per cent, 18 per cent and 28 per cent) and a cess above the peak rates on demerit and luxury goods. The exact item-wise rates will be decided by a committee of officials and may come out at a later date. The government is planning to table the GST bills and compensation legislation in the second half of the Budget session, which will reconvene on March 9.
