Four years of Modi government: As personal income tax collection showed a robust growth of 23%, the one question that popped up on the eve of four years of Narendra Modi government was: Is it because of demonetisation?
Four years of Modi government: As personal income tax collection showed a robust growth of 23%, the one question that popped up on the eve of four years of Narendra Modi government was: Is it because of demonetisation? Noted economists and PMEAC member Rathin Roy said that he cannot comment “whether it is due to replacement of one set of bank notes with other set of bank notes”.
During a discussion on CNBC-TV18, Rathin Roy was asked if 23% growth is sustainable that could be an achievement because of demonetisation, to which he replied that it could be one of the factors but a lot of work has been done in the revenue department over the years to increase the tax base. “If income rises by 11%, I will be happy with a rise of 15%, which is sustainable for next five-six years. It certainly is,” he added.
Rathin Roy is a part-time member of the 5-member Economic Advisory Council to the Prime Minister (PMEAC), which was formed in September last year after a gap of three years. The PMEAC address issues of macroeconomic importance and advises the Prime Minister.
On the same question, Jahangir Aziz of JP Morgan said that some of it can be some of it is attributable to government’s efforts whether demonetisation or just efforts put in for tax base expansion. He added that what now needs to be seen is whether there is an “actual simplification of the direct tax code”. In November last year, the Narendra Modi government had formed a task force for the complete overhaul of the 50-year-old Income Tax Act.
It was touted as an attempt to perhaps an efforts to reinstate the Direct Tax Code (DTC) in a new avatar. Earlier, this week the Income Tax Department said that the task force has been given an extention of three months to work on the plan.
India’s direct tax collection in the fiscal year 2017-18 stood at about Rs 10.03 lakh crore. Between April 2017 and March 2018, the direct tax collection was up 18% year-on-year. Last month, a finance ministry official had said the country’s direct tax mop-up had exceeded the budget target.