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‘Windfall gains tax will be reviewed if prices go down,’ says Revenue Secretary Tarun Bajaj

If windfall gains continue, the tax will continue. It will be reviewed if the gains go away or crude oil prices go down.

‘Windfall gains tax will be reviewed if prices go down,’ says Revenue Secretary Tarun Bajaj
Inflation is there, but tax buoyancy has remained strong too.

Tax collections are robust and tax buoyancy has improved, believes outgoing revenue secretary Tarun Bajaj, while noting that the December 15 advance tax collections will give a picture on how corporate tax collections are doing. In an interview with Surabhi, he also spoke on the upcoming GST Council meeting and the direction of tax reforms. Edited excerpts:

How do you see tax collections playing out as there are concerns about tax buoyancy? Also has inflation led to higher growth in indirect tax collections?

Tax buoyancy has certainly improved. It was about 2.5 times last year for direct taxes and it should be about 2 this year. This is very good. We haven’t seen this kind of tax buoyancy ever. On the indirect taxes also, it was almost 1.5 last year. We should see good tax buoyancy on GST also this year. We reduced customs duties a lot. Still, the customs duties will also bring in higher revenue collections. Inflation is there, but tax buoyancy has remained strong too.

There are concerns that corporate tax collections may slow down in the second half of the fiscal. Your views?

We are confident of exceeding the Budget Estimates for tax collection by about `4 lakh crore this fiscal. On corporate tax collections, let us see what happens. The December 15 advance tax numbers will give us a better understanding.

What is the key agenda for the GST Council meeting? Is there any thought on rate rationalisation?

I am not sure if the Group of Ministers (GoM) report on online gaming has come. If they submit it, it will be discussed. Appellate tribunal report and some other items, including decriminalisation of minor offences will be taken up in the coming up meeting. On rate rationalisation also, the GoM has not given its report.

Market participants are keen on doing away with securities transaction tax (STT). What are your thoughts on it? How much revenue has it brought in this year?

STT is already so low, it is not a huge burden. STT is growing at about 10% and has touched about Rs 16,000 crore. It is expected that we will meet last year’s collections this fiscal too.

Also Read: India GDP grows at 6.3 pc in Jul-Sept quarter

Is there an expectation of the windfall tax being reviewed?

If windfall gains continue, the tax will continue. It will be reviewed if the gains go away or crude oil prices go down.

Many new companies in the services sector are also keen on getting the 15% corporate tax rate for new manufacturing companies? Will that be considered?

We have only allowed the 15% rate to manufacturing companies and we will stick to that. The sunset for that is 2024 so let’s see unless the government further increases the time period, it will come to an end.

How do you see the tax reforms moving forward?

Tax reforms are like a flow, which will keep happening. We have done a number of reforms, on the indirect taxes, a lot of exemptions have gone, inverted duties have gone but some are still left out, which needs to be done. Rate rationalisation needs to be done.

On direct taxes, we have reduced the corporate tax rate to 22% and exemptions have gone away. It is much more simplified and we are also seeing the benefits of that and the revenue is going up. But in the personal income tax, there is still some work to be done, there is work to be done in capital gains tax. That will happen in time to come.

Many provisions of the Direct Taxes Code have been taken up. Will the rest also be looked into?

As far as the Direct Taxes Code is concerned, one can write a new code or one can keep reforming the old Act and turn it into the new code. This is what we have done in the corporate rate tax. It is a continuous process. Some bits have happened in the past few years and some bits will happen in the years to come.

Will tax reforms focus on simplification and remain benign? Will the focus on use of technology continue?

What we need is a simple tax regime, so that litigation is reduced. And in case there are violators of taxes in our system, and if they want to come back to the mainstream, they should be allowed to pay their taxes and penalty and the atmosphere is conducive for that. The updated return is an example of that. The use of technology has helped a lot in increasing compliance and we will keep roping in more technology in years to come.

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First published on: 01-12-2022 at 00:15 IST