Tax sops generate more revenue, says NCAER

New Delhi, March 23 | Updated: Mar 24 2006, 05:30am hrs
National Council of Applied Economic Research (NCAER) has said the government cannot claim to have lost Rs 1,58,661 crore in revenue due to tax exemptions, after providing such concessions in the first place to prop up investment and fulfill certain social commitments.

In fact some of the exemptions might have led to more output and hence more tax revenue, the economic think-tank said in its monthly report.

The five-page note on tax exemptions appended to the receipt budget manages to blame the beneficiaries of the exemption as if they granted it to themselves, the report said.

Revenue forgone from corporate tax works out to Rs 57,852 crore, and from personal tax the figure is Rs 11,695 crore. From excise, the figure is Rs 30,449 crore, while revenue loss from customs duty is Rs 92,561 crore. The loss from the cooperative sector is Rs 1,534 crore, taking the total, after removing the export related items, to Rs 1,58,661 crore, it said, quoting the five-page note.

NCAER asked whether there was any country at all in the world that does not provide tax incentives through exemptions, besides asking how to put a value on the economic benefits that flow from such exemptions.

It cannot be the case that governments all over the world are foolish. Nor can it be the case that in each and every case of tax exemptions, no economic benefits accrue to the country, it said.