In an interview to The Indian Express, Pandey also said the tax on super rich is like giving back to the society, on the lines of the ‘Give It Up’ scheme. Edited excerpts:
The GST target has been fixed lower than the Interim Budget by about Rs 1 lakh crore and only 3 per cent higher than last year’s revised estimate.
What we have done is that we have made a realistic assessment based on the current situation. Many were saying that the BE estimates (of Interim Budget) are unrealistic. We all are aware of the current economic situation and we are also aware in what direction our tax collections will be; based on that we have made a realistic assessment. That is why, if you see, what we ended up achieving was less than RE (revised estimate), so on the basis of our actual tax collection for 2018-19, we have given 14 per cent more. And that is our GST collection estimates for BE of this year’s regular budget.
Like you said that economic conditions are not too good. Only 7 per cent growth has been estimated for this fiscal. Therefore, tax collections won’t be buoyant. So will you be taking anti-evasion measures?
We have estimated 11 per cent as nominal growth, and we are saying 14 per cent. This difference between 11 and 14 per cent will come from increasing our efficiency of collection and that includes taking anti-evasion measures.
Is there is risk of migration to lower tax destinations as you have raised the tax rates for high net worth individuals?
People who have moved are either students or the working class. This fear of HNIs (high net worth individuals) moving out because of this is not justified. HNIs have very strong roots in this country and they would like to remain here. We have increased it marginally and my own impression is that they will welcome it. In US and other countries, there is a movement by rich people that billionaires should be taxed more. I think the rich here, they also realise duty towards the nation. Just like there was ‘Give It Up’ (scheme), this is giving back to the society. Giving back to the society according to their capacity.
In the Budget there have been several proposals to raise revenue through new forms such as increasing surcharge, tax on buyback of shares, TDS on cash withdrawals among others. Is there a concern on achieving desired revenue through traditional means?
More than the revenue collection, we have addressed on the structural front. For example, with 2 per cent TDS (tax deduction at source) on cash withdrawal, we are trying to push digital payments there are several banking and digital options available. We have 92 crore bank accounts and 76 crore are linked with Aadhaar; all MGNREGS payments are being made in the accounts. So the need for such a high cash withdrawal goes against this principle of having a less-cash economy.
We have also seen that total number of cash withdrawal in a year, where people who have withdrawn more than Rs 1 crore run into few lakh crore. We have also found that in many cases the PAN number is either not quoted or if quoted they are not the real PAN number. To address this issue and to push the less cash economy, this 2 per cent TDS on cash withdrawal of more than Rs 1 crore in a year has been done. So it is not a revenue mobilisation method.
We in the government would be, however, happy to see that no one withdraws more than Rs 1 crore and moves to digital system and we don’t get any TDS. But by putting this TDS, if they are withdrawing cash and not coming into the taxation system, this will ensure that correct PAN number is recorded, and then they can file return and take credit on the tax.
As far as increase in tax rate on income of over Rs 2 crore and Rs 5 crore is concerned, I would say that people having income of Rs 10 lakh and those having income of Rs 10 crore, they are being taxed at almost the same rate. So, on the basis of principle of equity, people earning more and who are capable of paying slightly more taxes for nation building certainly can pay more tax.
In India, the highest rate till Friday was 35.88 per cent and many countries in the world have higher taxation. While in Canada it is 54 per cent, it is 45 per cent in China. France (66 per cent), Japan (46 per cent), UK (45 per cent) and US (50 per cent) have much higher rates for people who are super rich and they are being taxed at much higher rates than they are being taxed in India. So, this proposal will lead to a marginal increase for a certain class. While it will lead to some revenue mobilisation, it won’t lead to a huge revenue augmentation.
We have also tried to make Aadhaar and PAN interchangeable. Now, 22 crore PAN are linked with Aadhaar but 120 crore Aadhaar have been issued. In India, the way our middle class is expanding, they will need PAN for various purposes. So, we are providing them convenience.
How much is the revenue loss on account of lowering corporate tax rate for those with turnover between Rs 250 crore and Rs 400 crore?
It would be around Rs 3,000 crore.
Will this MDR benefit be available only to businesses with a turnover of over Rs 50 crore?
No, we have mandated it for business over Rs 50 crore. However, if a lower turnover business also offers it, neither the business, nor the merchant, nor the customer will be charged MDR (merchant discount rate). So, it is optional for everyone. In the first phase, we did not want to make it mandatory for all because we have to look into the ability of the small business and small traders and take care of that. Eventually, he will also understand and do that.
The affordable housing benefit has been provided for only one year as of now. Would it be extended?
It has been introduced for two purposes. First, is to help the middle class to buy homes and at the same time to help developers who have the inventory as it will help them sell their unsold inventory. We want (that) all the inventory should get finished and therefore this limit has been enhanced. Whenever you give such concession, if you keep open ended, then it will not be as much helpful as it should be.
But the inventory levels in the market may not be eligible, as the houses there would be much bigger than those that have been allowed to qualify for the same.
When the government gives certain benefits, it wants them to go to the targeted class. And thus the signal given by the government is that the developers should construct more houses in the affordable housing segment. As for the existing inventory, that problem has to be dealt by the industry. If very costly houses have been built and they are not getting sold, those who built them have to deal with them.
While tax concessions have to go to the targeted lot, others who are not as deserving will have to see their problems getting addressed through other means. I am not saying that their problems should not be addressed, but they have to be addressed outside this taxation system. There are other modes of resolving their problem.