NEW DELHI: The government in the next few days will come out with a list of exemptions that would go as part of the plan to gradually reduce corporate tax to 25 per cent, the first tranche of which will be announced in the Budget in February, Finance Minister Arun Jaitley said today.
The Minister also said the government has been able to resolve a host of tax issues and expressed confidence that the Goods and Services Tax (GST) would be rolled out soon.
Participating in an interactive session at the ‘National Strategy Day in India’ organized by the World Economic Forum (WEF) and the Confederation of Indian Industry (CII), Jaitley said the signs of growth are visible and promised to carry out legislative reforms by bringing in a bankruptcy law and modifying the Specific Relief Act.
“I have announced a road map for direct taxation… (to) bring corporate tax down to 25 per cent by phasing out some of those exemptions. We are going to put in the public domain in the next few days some of those exemptions that we intend to phase out in the first round.
“The first tranche of reduction of corporate tax… I hope to do it in the near future whenever the new Finance Bill comes up,” the Minister said.
Jaitley, in his last Budget in February, had announced the government’s intention to reduce corporate tax to 25 per cent from 30 per cent over the next four years. The Minister will be presenting the next Budget in February 2016.
He also said the government has been able to address various tax legacy issues, including those pertaining to retrospective tax amendment, though two-three problems remain.
“Systematically, one by one, we have been resolving (taxation issues)… That fear of retrospective taxation has gone. Two-three of those problems remain and they remain because of legal reasons. I have publicly announced that we are looking for processes by which we can resolve some of these,” Jaitley said. . On GST, Jaitley said “considerable headway” has been made and he would discuss the issue with the Congress again to ensure passage of the Bill in the Rajya Sabha.
“I am willing to discuss with the Congress party… I have so far discussed with their leaders and I can’t find, at least, conceptual opposition to it. I will once again speak to them and try to make them see reason,” he said.
Talking about growth prospects, Jaitley said the increased indirect tax collections suggest economic recovery.
“I can now see trickles of growth. One of the greatest positives is a huge increase in indirect tax revenues,” he said, adding that the collection grew 36.5 per cent during the first seven months of the current fiscal ended October 31.
After discounting additional tax measures, the growth works out to 13.5 per cent.
“Excise duty, Customs, service tax… on a year-on-year basis increased 13.5 per cent. With additional revenue measures, it is much more. This is a real increase. This actually indicates that manufacturing itself is picking up,” he said.
Referring to challenges on account of global problems like devaluation of Chinese currency and possibility of a Fed rate hike, Jaitley said: “There are some crises which impact us much lesser, some impact us much directly. Our strategy has been to strengthen the basis of our economy so that impact of (the crisis) is transient and temporary…,” he said.
The Minister spoke of an improvement in macroeconomic data, going forward, which will enhance the country’s ability to deal with global problems.
He added that “impact (of Fed rate hike) certainly would be there. I think rather than actual change, it’s suspense which has been impacting us for the last few years”.
On the bankruptcy law, which will make it easier for companies to exit businesses, Jaitley said the endeavor would be to introduce the Bill in the next session of Parliament.
The committee, which has been assigned the task of drafting the bankruptcy law, will be submitting its report in the next couple of days. .
The government, Jaitley said, is working on updating certain other legislations, especially the Specific Relief Act. Besides, the government has come out with an ordinance to fast-track dispute resolution through arbitration.
To queries on power sector reforms, Jaitley said, “In the next couple of days, we are likely to announce some major policy decisions in that regard to take the sector out of stress. Once that happens, I am quite sure the private sector will also start participating.
“That is an infrastructure issue, which we are going to be addressing literally in the next couple of days, if not in the next couple of hours itself.”
The efforts, he said, would be to address financial problems of the distribution companies, which had to suffer on account of reluctance of state governments to raise tariff.
On relaxation of the land acquisition law, Jaitley said states will be encouraged to come up with their own laws which will be ratified by the Centre.
“There is a change in strategy that let the states bring about any change… The first state has already sent its proposal to the Centre, we have accepted it and they have notified it,” Jaitley said.–PTI
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