Lok Sabha Question No. 2769 (UNSTARRED), answered on 2016-12-02
Subject: Taxes Foregone
Ministry: FINANCE
Asked by: SIRAJUDDIN AJMAL, MANOJ RAJORIA

## (a):

## Direct Tax

Various tax incentives in the form of exemptions/deduction/special rates of depreciation/rebates, etc are provided under  the  Income-tax  Act,1961  to  promote  exports;  balanced  regional  development;  creation  of  infrastructure facilities;  employment;  donations  for  charity  and  rural  development;  scientific  research  and  development;  and  the cooperative  sector,  etc.    These  direct  tax  concessions  form  part  of  overall  fiscal  incentives  provided  by  the government to realise macroeconomic objectives and achieve policy goals of development and growth of various sectors of economy. The revenue impact of Direct tax incentives for the last three years are as follows:

(Rs. in Crore)

| Financial Year         | Corporate Income-tax                                       | Personal Income-tax                                        | Total                                                      |
|------------------------|------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------|
| 2013-14                | 57,793                                                     | 35,254                                                     | 93,047                                                     |
| 2014-15                | 65,067                                                     | 53,526                                                     | 1,18,593                                                   |
| 2015-16 (Projected)    | 68,711                                                     | 59,928                                                     | 1,28,639                                                   |
| 2016-17 (Current year) | Revenue Foregone cannot be estimated for the current year. | Revenue Foregone cannot be estimated for the current year. | Revenue Foregone cannot be estimated for the current year. |

## Indirect Tax

Customs and Central excise duty exemptions are extended to goods in general, considering inter alia the public interest. The revenue impact of Indirect tax incentives for the last three years are as follows:

(Rs. in Crore)

| Financial Year         | Revenue Impact of Tax incentives                    | Revenue Impact of Tax incentives                    | Revenue Impact of Tax incentives                    |
|------------------------|-----------------------------------------------------|-----------------------------------------------------|-----------------------------------------------------|
|                        | Customs Duty                                        | Excise Duty                                         | Total                                               |
| 2013-14                | 2, 60, 714                                          | 1, 96, 223                                          | 4, 56, 937                                          |
| 2014-15                | 2, 38, 967                                          | 1, 96, 789                                          | 4, 35, 756                                          |
| 2015-16 (Estimated)    | 2, 57, 549                                          | 2, 24, 940                                          | 4, 82, 489                                          |
| 2016-17 (Current year) | These figures will be given along with next Budget. | These figures will be given along with next Budget. | These figures will be given along with next Budget. |

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA UNSTARRED QUESTION NO. 2769

TO BE ANSWERED ON FRIDAY, DECEMBER 2, 2016 AGRAHAYANA 11, 1938 (SAKA)

## TAXES FOREGONE

## 2769: SHRI SIRAJUDDIN AJMAL: DR. MANOJ RAJORIA:

Will the Minister of FINANCE be pleased to state:

- (a) the amount of customs, excise, income and corporate taxes foregone during each of the last three years and current year along with the reasons therefor, category-wise; and
- (b) the measures taken by the Government to reduce the quantum of revenue foregone?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SANTOSH KUMAR GANGWAR)

(b):

## Direct Tax

The policy of Government as announced by Finance Minister during Union Budget Speech 2015 is to phase out all deductions/exemptions/special rates under the Income-tax Act along with phased reduction of corporate tax rates from 30% to 25 % in four years. Accordingly, phase out plan was implemented vide Finance Act, 2016 by providing sunset clause to different sections providing deductions and exemptions in the Income tax Act. This step is likely to reduce revenue foregone in coming years.

## Indirect Tax

Customs  and  Central  Excise  duty  exemptions/  concessions  are  reviewed  every  year  as  part  of  the  Budget Exercise. Some of the steps taken in this regard in last five fiscal years are as under:

- (i) With a view to prepare for transition towards the GST regime, in Budget 2011-12, central excise duty exemption was withdrawn on 130 items which are essentially consumer items and are presently chargeable to VAT.
- (ii) In Budget 2012-13, the effective rate of excise duty on non-petroleum products of 10% was increased to 12%, concessional rate of excise duty of 5% was increased to 6%  and the lower rate of 1% was increased to 2% (except precious metals, jewellery, coal and fertilizers).
- (iii) In Budget 2013-14 customs duty was increased on high-end cars from 75% to 100% and on high-end motor cycles from 60% to 75%. Customs duty was levied on steam coal.
- (iv) In Budget 2014-15 customs duty was increased on coking coal from NIL to 2.5%, on steam coal and bituminous coal from 2% to 2.5%, on metallurgical coke from Nil to 2.5%, on stainless steel flat products from 5% to 7.5%, on specified telecommunication products not covered under the ITA (Information Technology Agreement) from NIL to 10%. Excise duty was imposed on Polyester Staple Fiber/ Polyester Filament Yarn manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles.
- (v) In  Budget 2015-16,  customs duty was increased on metallurgical coke from 2.5% to 5%. Excise  duty of 2% without CENVAT credit or 6% with CENVAT credit was levied on condensed milk put up in unit containers and on peanut butter.
- (vi) In post-Budget 2015-16, excise duty exemption to defence PSUs and Ordnance Factory Board was withdrawn w.e.f.  01.06.2015.  Also,  CVD  and  SAD  exemption  on  imports  of  certain  cases  of  defence  supplies  was withdrawn w.e.f. 01.06.2015.
- (vii) The concessional rate of excise duty on petrol and diesel (both branded and unbranded) was increased in a phased manner since November 2014.
- (viii) In Budget 2016-17:
-  Excise  duty  of  2%  (without  CENVAT  credit)  and  12.5%  (with  CENVAT  credit)  was  imposed  on  branded readymade garments and made up articles of textiles of retail sale price of Rs.1000 or more.
-  Excise  duty  of  1%  (without  CENVAT  credit)  and  12.5%  (with  CENVAT  credit)  was  imposed  on  Articles  of Jewellery [excluding silver jewellery, other than those studded with diamonds, ruby, emerald or sapphire].
-  Basic Customs Duty on Cashew nuts in shell was increased from Nil to 5%.
-  The BCD, CVD and SAD exemption on direct imports of specified defence supplies by Government of India or State Governments was withdrawn with effect from 01.04.2016.
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