Lok Sabha Question No. 295 (UNSTARRED), answered on 2024-02-05
Subject: Tax to GDP
Ministry: FINANCE
Asked by: Shashi Tharoor

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA

## UNSTARRED QUESTION NO. 295

TO BE ANSWERED ON MONDAY, FEBRUARY 5, 2024 MAGHA 16, 1945 (SAKA)

## TAX TO GDP

## 295. DR. SHASHI THAROOR:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government plans to take any steps which would expand the tax base by including the informal sector in the taxable base;
- (b)  if so, the details thereof and if not, the reasons therefor;
- (c) whether the Government is planning to take any steps to increase the Tax to Gross Domestic Product (GDP) growth of India; and
- (d) if so, the details thereof ?

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## ANSWER (SHRI PANKAJ CHAUDHARY)

(a) to (d) : The Government has undertaken several steps to boost tax collection and expand tax base by curbing tax evasion, widening/deepening of tax base, promoting voluntary compliance by use of technology and promoting digital transactions.

Some of the steps taken by the Government are as follow:

## Direct Tax

- (i) Simplification  of  the  Personal  Income-tax  -  Finance  Act,  2020  provided  an  option  to individual  taxpayers  for  paying  income-tax  at  lower  slab  rates  if  they  do  not  avail specified exemptions and incentives. Finance Act, 2023 has further  increased the scope and reduced the rates applicable in case of individuals by providing that with effect from assessment  year 2024-25, the  rates provided under  section 115BAC(1A) of the Incometax Act, 1961 (the Act) shall be the default rates.
- (ii) Reduction in the Corporate tax rate - Starting from the Finance Act, 2016, the corporate tax rates have been gradually reduced while phasing out the exemptions and incentives available to the corporates so as to increase the tax base. In order to promote growth and investment, the Government has brought in a historic tax reform through the Taxation Laws (Amendment) Act, 2019 which provided a concessional tax regime of 22% (plus surcharge  &  cess)  for  all  existing  domestic  companies.  Further,  in  order  to  attract investment  in  manufacturing  sector,  the  tax  rate  for  new  manufacturing  domestic company (incorporated on or after 01.10.2019 and which commences manufacturing on or before 31.03.2024) has also been reduced to 15% (plus surcharge & cess). In line with the Government's stated policy of removing exemption/deductions, these reduced rates are applicable for only those companies which do not avail exemptions/deductions. These companies have also been exempted from Minimum Alternate Tax (MAT).
- (iii) New Form 26AS - This new form contains all information of deduction or collection of tax at source, specified financial transaction (SFT), and payment of taxes, demand and refund etc. Further, details of SFT data in the Form 26AS makes taxpayer aware about their transactions beforehand and encourages them to disclose their true income.
- (iv) Pre-filling  of  Income-tax  Returns  -  In  order  to  make  tax  compliance  easier  pre-filled Income  tax  Returns  (ITR)  have  been  provided  to  individual  taxpayers.    The  scope  of information  for  pre-filling  includes  information  such  as  salary  income,  bank  interest, dividends, etc.
- (v) Updated Return - Section 139(8A) of the Act facilitates the taxpayer to update his return anytime within two years from the end of the relevant assessment so that he can file an updated return by voluntarily admitting omissions or mistakes and paying an additional tax as applicable.
- (vi) e-Verification Scheme-  e-Verification Scheme launched by the Department is another component  of  the  digitalized  tax  administration,  to  enable  the  authorities  to  collect information for the purpose of accurate and comprehensive determination of income of a taxpayer to reduce tax evasion. Through this Scheme, the taxpayers are provided all the relevant financial information pertaining to them, collected from various sources.
- (vii) Simplification of compliance norms for Start-ups - Start-ups have been provided hasslefree tax environment which includes simplification of assessment procedure, exemptions from Angel-tax, constitution of dedicated start-up cell.
- (viii) Setting up of Dispute Resolution Committee (DRC)- For reducing litigation and to give an impetus to the dispute resolution for small taxpayers, Dispute Resolution Committee has been constituted.   A taxpayer having taxable income up to Rs. 50 lakh and disputed income  up  to  Rs.  10  lakh  shall  be  eligible  to  approach  the  Committee.  For  ensuring efficiency,  transparency  and  accountability,  the  procedure  of  the  Committee  will  be conducted  on  a  digital  platform  under  the  e-Dispute  Resolution  Committee  Scheme, 2021.
- (ix) Expansion of scope of TDS/TCS - For bringing new tax-payers into the income-tax net, scope of TDS/TCS was expanded by including huge cash withdrawal, foreign remittance, purchase of luxury car, e-commerce participants, sale of goods, acquisition of immovable property, purchase of overseas tour program package etc.

## Indirect Taxes

GST rates/ rate slabs applicable on goods and services are prescribed on the recommendations of  the  GST  Council  which  is  a  constitutional  body  comprising  representatives  of  states  and centre. Based  on  the    recommendations  of  the  47th  GST  Council,  various  exemptions  on  services such  as  services  provided  by  operators  of  the  common  bio-medical  waste  treatment  facility  to  a clinical establishment etc., exemption on hotel accommodation priced at less than Rs 1000 rupees per unit  per  day  etc.,  exemptions  and  concessional  rates  on  various  products  including  e-waste,  goods related  to  petroleum  operations, scientific  and  technical  instruments  supplied  to  public  funded research institutes, cheques, maps and hydrographic charts etc., were withdrawn thus expanding the tax base.

Similarly, 45th GST Council recommended to bring brick kilns under Special Composition Scheme with threshold limit of Rs. 20 lakhs as against the standard threshold limit  of Rs 40 lakhs, with GST at the rate of 6% without ITC and GST rate of 12% with ITC would otherwise apply to bricks.

*****