Finance minister Arun Jaitley’s budget is short R20,000 crore, and he has his predecessor to thank for this...
Finance minister Arun Jaitley’s budget is short Rs 20,000 crore, and he has his predecessor to thank for this.
Each year, on April 30, banks remit the tax deducted at source by them for the previous fiscal to the finance ministry. The government shows the sum in its accounts for the current fiscal. For instance, the sum paid to the government on April 30, 2014, will form a part of receipts for the year 2014-15.
But as receipts fell short for the year 2013-14, making it difficult to keep the estimates close to budget projections, finance ministry officials asked the banks to book the sum a month ahead, that is, on March 31, 2014.
“In effect the finance ministry earned the TDS from the banks twice over in 2013-14. The first was in the ordinary course on April 30, 2013, and then again in March, 2014,” says former secretary, economic affairs, R Gopalan. Gopalan retired in 2012.
The exercise was done in the vote-on-accounts that the incoming NDA government tabled in Parliament in June this year. The calculations were kept intact in the subsequent full Budget that Jaitley tabled in July too. The finance ministry team that executed the manoeuvre has been largely replaced.
The change was made possible since the Centre still uses cash instead of accrual accounting. But the jugglery has created a headache for the current team, as they have to dig deeper to find money to replace this gap.