New Delhi: Economic Advisory Council to the Prime Minister (EAC-PM) chairman Bibek Debroy today said that accretion of fresh non-performing assets (NPAs) of public sector banks (PSBs) has virtually stopped.
Participating in a discussion on Budget 2018-19, Debroy said it was possible to scrap income tax and other direct taxes and replace them with indirect taxes but indirect taxes can never be progressive.
Referring to issue of low-income tax collection, he said it was mainly because farm income is not taxed in India.
Debroy also regretted that not many experts argue in favour of taxing farm income, at least above the certain threshold. "Fresh case of NPA creation has virtually stopped. Many NPAs figures are floating, I think India's bank NPA is not more than 3 lakh crore," he insisted.
However, according to recent Reserve Bank of India data, bad loans of Public sector banks (PSBs) stood at Rs 7.34 lakh crore by the end of second quarter this fiscal, a bulk of which came from corporate defaulters.
Replying to a query on direct taxes, Debroy said that it is perfectly possible to scrap income tax and other direct taxes. "Although in poor countries like India, it is easier to monitor indirect taxes. But indirect taxes can never be progressive," he noted.
Referring to issue of low-income tax collection, the chairman of EAC-PM said," One reason is that the number of personal income taxpayers is so low is because the rural sector is completely out of the purview of income taxation. It's a state subject so the Union government can't do anything."
"But the question I am asking that how many of us are arguing that tax should be levied and if such a tax is levied then obviously it should be levied above a certain threshold," he stressed while referring to farm income taxation.
Debroy also said that fiscal profligacy has its cost. He pointed out that fiscal deficit for the current fiscal is higher because Goods and Services Taxes (GST) could be counted only for 11 months. "Had it not been, the fiscal deficit would have been closer to 3.2 percent of GDP this fiscal," he stressed.