Tax burden to be reduced by 25-30% for tax payers: Fin Min
The finance ministry on Wednesday said the tax burden on people will come down by 25-30 per cent with the introduction of the proposed Goods & Service Tax, which seeks to subsume various levies like excise and VAT.
New Delhi: The finance ministry on Wednesday said the tax burden on people will come down by 25-30 per cent with the introduction of the proposed Goods & Service Tax, which seeks to subsume various levies like excise and VAT.
"Distortions in indirect tax system will be fully removed and addressed after the GST is put in place... burden on tax payers will be reduced by at least between 25-30 per cent and the new system will ensure complete transparency to ensure smooth tax compliance," Revenue Secretary PV Bhide said.
Speaking at a function of industry body Assocham, he also said the draft legislation on GST has been referred to legal experts and would be finalised shortly to enable the government achieve target of implementation of goods and service tax.
The government has planned to introduce GST from April 1, 2010. The new tax regime will replace excise duty and service tax at the central level and value added tax at the state level, besides the cess, surcharges and local taxes being levied on good and services
However, there are apprehensions about the GST implementation from the next fiscal. A task force of the 13th Finance Commission had suggested postponing the GST implementation by six months to October 1, 2010.
Also, speaking on the occasion, Central Board of Excise and Customs Special Secretary and Member S Dutt Mazumdar, clarified that it has been almost decided that the purchase taxes would be subsumed in the GST.
However, subsuming natural gas into GST is still subject to discussions between authorities concerned. Replacing electricity duty, levy of sugar and textile by GST is still not decided, he added.
Bhide further said the indirect tax collections may fall short of the target by around Rs 22,000 crore this year on account of poor realisation of customs and excise duties.
The government has made it clear that indirect tax collection target of Rs 2.7 lakh crore for the current fiscal would not be met as revenue realisation is low. The government had collected around Rs 2.81 lakh crore as indirect taxes in 2008-09.
Finance Secretary Ashok Chawla yesterday said, "it is very unlikely that estimates on indirect tax will be met, but on the direct taxes front, we are maintaining that it will bemore than met."
Indirect tax collection in the first seven months of the fiscal shrunk by over 21 per cent to Rs 1.26 lakh crore compared to Rs 1.61 lakh crore in the same period last year owing to the economic slowdown and subsequent stimulus measures to spur growth.
According to Budget estimates, the government aims to earn Rs 6.4 lakh crore from both direct and indirect taxes during the current fiscal.