India is an oasis in the world economy hit by a demand slump, according to revenue secretary Hasmukh Adhia. In the current situation, foreign investors would like to come to India to cater to the Indian market rather than export from here. He also suggested that companies would do well not to take the special economic zone (SEZ) route to cater to the domestic market. The 57-year-old secretary, in an interview with Siddhartha P Saikia, talks about how the budget would catalyse growth. Excerpts:
Though your overall tax revenue projections for FY17 seem realistic, the 18% growth seen in personal income tax seems a bit too optimistic. Also, the excise collections could be higher.
The buoyancy in personal income tax (PIT) would very much be there. This is partly because of the Pay Commission award, but we are also confident of making taxpayers pay their legitimate taxes. We have enhanced infrastructure to detect people who are not paying their taxes. Our digital capability has gone up and so has the reporting requirement for PAN. This will help us bring a lot of new people into the tax net.
The excise target is not an underestimate because the growth this year has been phenomenally high. This is a huge base and yet, we predicted a 11-12% growth on that. So these are modest and realistic assessments. If we get more, it would indeed benefit the economy.
You have not reduced the MAT (minimum alternate tax) rate, even though the process of removal of corporate tax incentives have been kickstarted.
In the present situation, compared with global demand for goods and services, the Indian demand is more resilient.
India is the only country which has got unlimited demand at this point of time. All the countries of the world are eying the Indian market. If you want to produce for the domestic market, you should not get into the hassle of producing in a special economic zone and then sending the product to the domestic territory. That is not done.
Foreign investors would like to come to India to cater to the Indian market rather than for exports. In China and other countries, everyone’s factory has excess production. Everybody is trying to outdo each other and tap the Indian market.
How beneficial will be the duty restructuring in the Budget for Make in India?
Various changes have been made in the excise and customs duties — 150-200 of them. These are all done deliberately after consultation with various ministries, to help Make in India and Make for India. Many raw materials and capital goods will become cheaper to import, and finished goods costlier.
What is the loss expected from the cut in tax rate to 29% for companies with turnovers up to R5 crore?
Some R2,000 crore. Had we extended the same tax cut to the whole of Corporate India, the loss would have been R15,000 crore, something we could not afford at this juncture.
And what is the extra mop-up from the extra 10% dividend tax in the hands of the recipients?
Again, R2,000 crore or so.
Have you any collection target from the income disclosure scheme?
Not really. This is not an amnesty scheme but an income-disclosure scheme. The idea is not revenue mobilisation.
The phase-out of tax incentives may not be getting you anything as this will only start from 2017-18.
True. Even for next year, we don’t expect anything more than Rs 3,000 crore on this count.