Economy
Fiscal deficit targets kept at 3.9 percent this year, 3.5 in 2017
New Delhi : Declaring that prudence lies in adhering to fiscal targets, Finance Minister Arun Jaitley on Monday retained the "much awaited figure" of fiscal deficit for the current financial year at 3.9 percent of GDP, and at 3.5 percent for 2016-17.
 
Presenting the union budget for the next fiscal in parliament. Jaitley said he had decided that prudence lies in adhering to fiscal targets, but while doing so he has also ensured that the development agenda is not compromised.
 
The finance minister said the estimate of revenue deficit for this fiscal has come down to 2.5 percent from the previous estimates.
 
The government has targeted reducing the fiscal deficit to 3.9 percent of the gross domestic product (GDP) in the current financial year, compared with four percent last year, and reduce it further to 3.5 percent in 2016-17.
 
The fiscal deficit for 2014-15 touched 4.1 percent of the gross domestic product.
 
The revised estimate (RE) of gross tax collections for this fiscal are around Rs.14.60 lakh crore, as against the budget estimate (BE) of nearly Rs.14.50 lakh crore. The budget estimate for the next fiscal on this count has been pegged at Rs.16.30 lakh crore.
 
The government's fiscal deficit target of 3.9 percent for the current fiscal "seems achievable", the 2015-16 Economic Survey said last week.
 
"Significant increase in revenue receipts, led by buoyant indirect tax collection, higher level of capital expenditure on the plan side, lower subsidies and enhanced untied resources transferred to the states following the acceptance of the recommendations of the 14th Finance Commission" were the basis of the government's optimism on this count.
 
"The coming year is expected to be a challenging one from the fiscal point of view because of challenges posed by a lower-than-projected nominal GDP growth," said the survey, which was presented in parliament on Friday.
 
"The chances of India's growth rate in 2016-17 increasing significantly beyond 2015-16 levels are not very high, due to likelihood of persistence of global slowdown," it said.
 
"The implementation of the Pay Commission recommendations and the 'One Rank One Pay' scheme will put additional burden on expenditure," it added.
 
Moody's Investors Service said earlier this month that India's fiscal position will remain weaker than other emerging economies in the near term even if fiscal consolidation continued on course.
 
"Even if the budgetary consolidation continues, India's fiscal metrics will remain weaker than rating peers in the near term, because of the relatively high levels of deficits and debts of India's state and central governments," Moody's said in a report.
 
"The importance of the upcoming budget lies in its message on the government's fiscal consolidation plans," the American agency said.
 
"But at around 63.8 percent of GDP, India's government debt ratio remains high compared with a median of 49.5 percent for Baa3-rated peers. Without continued fiscal consolidation, India's government finances will continue to compare poorly with the peers," it added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Jaitley announces amnesty scheme on black money
New Delhi : Union Finance Minister Arun Jaitley on Monday announced a new amnesty scheme for those holding unaccounted money and assets to come clean by paying 45 percent of such wealth.
 
The government offers a compliance window to domestic tax payers to declare their past transgressions and come clean by paying 45 percent of the undisclosed income and assets (tax 30 percent, surcharge 7.5 percent and penalty 7.5 percent), Jaitley said while presenting the 2016-17 general budget in parliament.
 
"We plan to open the window under this Income Disclosure Scheme from June 1 to September 30, 2016, with an option to pay the due amount within two months of the declaration," the finance minister said.
 
Regarding the income shown in these declarations, there will be no scrutiny or enquiry under the Income Tax Act or the Wealth Tax Act and the declarants will have immunity from prosecution, Jaitley said.
 
Immunity from Benami Transaction (Prohibition) Act, 1988 is also proposed, subject to certain conditions.
 
The minister said after offering an opportunity to declare the concealed income, the government will focus all its resources on bringing people with black money to book.
 
"This shows that the government has launched a two-pronged attack on domestic black money - one by curbing the generation of black money, and second, by asking domestic tax evader to come clean by disclosing their undisclosed income and assets," Suraj Nangia, partner, Nangia & Co., told IANS.
 
He said the government is tackling the menace of domestic black money by effecting changes in rules to discourage cash transactions, compulsory reporting of Permanent Account Number and others.
 
The new amnesty scheme is yet another constructive step to kill the menace of domestic black money, Nangia added.
 
The 7.5 percent surcharge on the undisclosed income will be called Krishi Kalyan surcharge, which will be used for agriculture and rural economy.
 
Last October, the government said it had received 638 declarations regarding undisclosed foreign assets amounting to Rs.3,770 crore under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Act). 
 
Thirty percent tax and as much penalty was to be paid by December 31, 2015. The compliance window that opened on July 1, 2015, closed on September 30, 2015.
 
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Act) has been enacted to deal with the menace of black money stashed abroad. 
 
The Act also provided for a compliance window for a limited period to people who have undisclosed foreign assets which they had not disclosed for the purposes of income tax so far.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Subramani P K

12 months ago

Unless drastic steps are taken just like raid by high level anti corruption agencies,arrest of the culprits, confiscate the unaccounted wealth and stringent punishment bringing out black money is a very difficult task. Without fear or favour immediate action should be taken to organize raids by ED, IT & other agencies as done in the case of Karthi chithambaram.

Government turning tax payer friendly
New Delhi : Terming tax disputes as a scourge of tax-friendly regime, Finance Minister Arun Jaitley, presenting the budget for 2016-17 on Monday, unveiled a new dispute resolution mechanism to minimise litigation.
 
He also said that Income Tax officials will be responsible for higher interest payout if there was a delay in implementing the orders of Appellate authority.
 
He said there were around 300,000 tax cases pending with the First Appellate Authority involving a tax dispute of around Rs.550,000 crore.
 
As per the new dispute resolution mechanism unveiled by Jaitley, a tax payer who has an appeal pending as of Friday before the Commissioner (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment.
 
There will be no penalty in respect of income tax cases with a disputed tax up to Rs.10 lakh.
 
Accoriding to Jaitley, the cases with disputed tax exceeding Rs.10 lakh will be subjected to only 25 percent of the minimum of the imposable penalty for both direct and indirect taxes.
 
He said any pending appeal against a penalty order can also be settled by paying 25 percent of the minimum of the imposable penalty.
 
However, certain categories of persons including those charged with criminal offences under specific Acts are proposed to be barred from this scheme.
 
With special reference to the government's assurance of not to create retrospectively fresh tax liability, Jaitley reiterated the government's commitment to provide a stable and predictable taxation regime and not create fresh tax liability retrospectively.
 
He proposed one-time scheme of dispute resolution for past cases ongoing under retrospective amendment.
 
One can settle the case by paying only the tax arrears in which case liability of the interest and penalty shall be waived. This is subject to agreeing to withdraw any pending case lying in any Court or Tribunal or any proceeding for arbitration, mediation under Bilateral Investment Protection and Promotion Agreements (BIPA).
 
Identifying that levy of heavy penalty as a cause for a large number of disputes, Jaitley proposed to modify the scheme of penalty by providing different categories of misdemeanour with graded penalty and thereby substantially reducing the discretionary power of the tax officers.
 
The penalty rates will now be 50 percent of tax in case of underreporting of income and 200 percent of the tax where there is misreporting of facts. Remission of penalty is also proposed where taxes are paid and appeal is not filed.
 
Quantification of disallowance of expenditure relatable to exempt income in terms of Section 14A of the Income Tax Act is another issue led to number of disputes. Hence, it has been proposed to rationalize formula in Rule 8D governing such quantification.
 
Jaitley said the Income Tax department was also issuing instruction making it mandatory for the assessing officer to grant stay of demand once the assessee pays 15 percent of the disputed demand while the appeal is pending before Commissioner of Income Tax (Appeals).
 
Jaitley also said the government has accepted many of the recommendations of Justice Easwar Committee.
 
To make the Income Tax officials responsible, Jaitley said the government will pay nine percent interest on where there is a delay in implementing the Appellate orders beyond 90 days.
 
"The officers who delay it will be accountable for this loss to the government," Jaitley said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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