scorecardresearch
Follow Us:
Friday, February 26, 2021
Premium

Ajay Bhushan Pandey: ‘Lots of conditional reliefs in Customs, have tried to take them into their proper rate’

Pandey said there is a need to step out of the mindset to tinker tax rates in every Budget and that tax stability will be achieved by keeping tax rates unchanged.

Written by Aanchal Magazine , Pranav Mukul | New Delhi |
Updated: February 4, 2021 7:51:54 am
Ajay Bhushan Pandey

The decision to tax higher contributions in provident funds was taken from the point of view of ensuring equity, Finance Secretary Ajay Bhushan Pandey said. In an interview with Aanchal Magazine and Pranav Mukul, Pandey said there is a need to step out of the mindset to tinker tax rates in every Budget and that tax stability will be achieved by keeping tax rates unchanged. Excerpts:

To read this story, sign up here
Sign up to get quick access to Indian Express exclusive and premium stories.
Already a member?

Were the income-tax rates not changed due to fiscal constraints or was there any other reasoning behind it?

See, we need to get out of the mindset that every Budget some tax rates need to be tinkered. What is needed is the stability of the tax rates. Now, certain tax rates, particularly in the simplified system, which we introduced last year, have lower rates in the various slabs. The first return will get filed under the new system this coming year. So, we need to see the experience and, then, we should do this. But, somehow there could be expectations from certain quarters that in every Budget, either some taxes have to be increased or decreased. We need to avoid that kind of mindset. And, unless and until, it is very necessary, then only the rates should be changed. Otherwise, what we should try to achieve is stability in the tax rates.

But a lot of changes have happened on the Customs duty side.

Customs duty is linked to transactions. It is based on the international situation, but, then, if you see the general thread, what we have tried to do is that there were certain lots of conditional exemptions. We have tried to take them into their proper rate, those rates are also within the reasonable level right now. In many items, we have reduced this rate, particularly, on the steel sector because we wanted to know, at this particular time, when the steel prices were very high. So, we wanted to know whether something could be facilitated during imports. So, those are all measures that we have taken. But, on the other hand, if you see that we have tried to reduce the straight line through the nylon chain, we reduced this rate because there are other pillars of polyester, viscose.

This was getting harder with different duty structures. So, we have tried to remove them in certain areas. We have reduced this Custom, we have changed the Custom duty rates because we wanted to correct it. So, for that purpose, for things that are already been manufactured in India … we have said that, on those items, whether some Custom duty could be brought, otherwise, there is not much change in that. We have tried to provide a stability in the Custom duty cycles.

The raw materials should come at a lesser duty rate. Intermediate items should have only an intermediate level of taxes. The finished goods, which are being manufactured in India, or we want the Indian companies to manufacture, it could be a little higher. But, then only up to a certain level, not at a very high level. So, this is the broad philosophy, where most items should fit into this category.

The new agricultural cess has been done through restructuring, which will ensure higher share for Centre, not to be shared with states.

Improving the infrastructure in the agriculture sector is the need of the hour. If we have to ensure that the farmers get their productivity increases, remunerative prices for their produce and there is a value addition in the entire chain, you need to improve infrastructure. Now, the question was that, how do you get the resources and then the certainty of the resources for doing so. This is because it’s not going to be a one- or two-year exercise. This is going to continue for several years. So, where do you get the certainty of the resources? So, for that, we needed an earmarked fund. And, this year, marking has been done by readjusting certain existing duties, whether it is an excise duty, additional excise duty or the Customs duty. For that purpose, on a very limited number of items, this cess has been imposed. And it has been done in such a manner that it does not increase the burden on the consumer, it is the only internal adjustments within the government’s taxes.

Will it be an ongoing exercise going ahead to add more commodities under this agricultural cess umbrella?

At this point of time, it is not fair for us to say how will it be in the future. But, we have an idea as to how much money will be required for agricultural infrastructure development, and to that extent, we have identified the commodities, also the rates, and this much amount (Rs 30,000 crore) should serve the purpose.

Tax exemptions have been removed for some provident fund and ULIP investments. What’s the rationale for it.

Provident fund, this is more from the equity point. Only a few cases where the people were putting a huge amount of money and getting a solid return and then the tax benefit. So, these are the central anomalies we have tried to remove. Ninety nine per cent of people pay less than Rs 2,50,000. For ULIP, that is also a distortion.

One side, you have a mutual fund and mutual fund gets taxed in a particular way. But, just because there is a small element of insurance, and then the whole thing was also not getting taxed. It will also have to be seen from the equity point of view and a level-playing field.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.

Advertisement
Advertisement
Advertisement
Advertisement