Revenue Secretary hints towards no Change in Tax Rates

Revenue Secretary Sanjay Malhotra says the government aims to establish a stable and low-tax framework while also ensuring that GST loopholes are closed.

Let’s see what the Excerpts say:

Was the decision not to change rates due to the fact that the new tax regime’s structure takes effect in the current financial year?

Absolutely, we have chosen continuity and stability. Moreover, this was an interim budget.

What is the strategy for the medium term?

The effective tax rate is quite reasonable. Customs duty, like other indirect taxes, is revised annually. We did not accomplish it this time because the budget was interim. In the medium term, the emphasis is on enhancing tax services, making things simpler, rationalising taxes where necessary, and leveraging more technology to broaden and deepen the tax base through increased information and economic formalisation. We don’t want too many changes in tax rates.

Which segments are focused on broadening the base?

We are not thinking about any particular sector. There are concerns about fictitious or non-existent enterprises in the context of GST and associated fraudulent billing. GSTN is built on trust, and we’ve seen the benefits of trust-based compliance. However, some dishonest persons have taken advantage of the system to avoid paying taxes by passing on the credit. If you choose not to use your input tax credit, the system will check when you pay your taxes the next month.

If you passed on the credit, it means you collected tax from the customer, and you must pay. Today, the system allows taxpayers to update it. This was done for honest taxpayers, however, due to misuse, we must replace it.

Is it time to rationalise the GST slabs?

The GST Council makes the changes. Major modifications are based on ministers’ recommendations. Currently, there is no recommendation.

Is there a time frame for phasing out the old income tax scheme, and how do you intend to promote the new regime?

We do not want to phase away the old or traditional tax system with exemptions and deductions. However, the goal is to promote a simpler tax system, whether for corporate or personal income tax. That is why the new system was made more appealing. By making the new regime the default scheme… and using the tax calculator to help people determine which one to choose.

The number of income returns has exceeded eight crore. How do you anticipate it developing in the coming years?

We estimate it to reach 10 crore in two to three years, assuming a 10% growth rate.

The income tax return form undergoes numerous revisions. How can there be increased stability?

You are correct: there is a benefit to preserving stability. A uniform form has been created with the goal of making the process easier and more user-friendly for taxpayers. Forms were originally developed for paper returns before being digital. We’ve now completed a metamorphosis and examined returns through the lens of electronic returns.

How do you propose to implement the new scheme for outstanding demands?

We intend to implement the scheme within two months. Taxpayers do not need to do anything because the Income Tax Administration will be updating its records. Given the possibility of several entries against one person, the maximum amount that can be removed per person is Rs 1 lakh. The number of entries is 1.1 crore, whereas the number of unique beneficiaries would be less than one crore.

Most frauds revolve around PAN and Aadhaar numbers. Are you looking for solutions to make PAN secure?

Previously, banks were just questioned whether GST was linked to Aadhaar. Now we’re tightening it. We are undertaking a GST trial in Gujarat and Puducherry, and registration is based on biometric authentication rather than OTP. Biometrics requires the individual to visit the centre. Biometric authentication will be necessary in high-risk scenarios.