Economy is bouncing back, tax compliance has been much better in last two years, says Revenue Secretary

Revenue Secretary Tarun Bajaj told Business Today in an exclusive interview that India's economy is bouncing back and that the tax compliance has been much better in the last two years.

"Need of the hour for the country is buoyant tax collections. See a larger number of people paying more revenues. After demonetisation, the economy has started moving towards formal business rather than informal business," said Bajaj with only a few months left for Union Budget 2023-24.

The Finance Ministry official said direct taxes will exceed expectations.

"Direct taxes as of today are a little over 24 per cent on net basis, will be over 27-30 per cent of the budgeted target. Refunds have grown robustly, up by 60 per cent on an annual basis. Anticipating less of excise and customs duty, but will exceed the budgeted target. GST doing well, will exceed the indirect tax target by 1.5 lakh crore. Credit goes to the political bosses and the last man on the field in the chamber," said Bajaj.

On Direct Taxes Code (DTC), Bajaj said, "Legislative process itself has become a little more contentious. Bringing consensus takes time, but it will happen sooner or later."

Through DTC, the government aims to simplify the structure of direct tax laws in India into a single legislation.

Bajaj said Goods and Services Tax (GST) has brought lot of changes, and for the good of the economy.

"GST has brought lot of discipline in financial dealings of the corporate sector. A company like HUL or ITC cannot sell goods and services without paying GST. GST has helped in white economy, ease of doing business, matching of figures and calculations. We are moving towards a formal economy where the tax base will also go up," said Bajaj.

However, the official admitted that lot more work needs to be done on GST.

"Still need to work on a lot, especially the inverted duty. Large number of items we have rectified, some items are still left out," said Bajaj.

About levying 18% GST on certain products, Bajaj said, "There could be a case to discuss this at the GST Council meeting. Ultimately, you have to also see where are you getting your revenues. Need to have faith in the collective wisdom of the Council."

The official is not ruling out petroleum and alcohol coming under the ambit of GST.

"Once the states and Centre realise that GST is serving its purpose and there is no cascading effect, then the time for all of this will come. Once upon a time, nobody liked GST but major change in attitude has been seen in last one year," said Bajaj.Also read: RBI announces launch of first pilot for digital Rupee on Dec 1

Also read: Need to simplify the capital gains tax regime, says Revenue Secretary Tarun Bajaj ahead of Budget 2023