Budget-like movements that were not part of the budget
NEW DELHI: In 1991, the P V Narasimha Rao The government introduced important economic reforms: it chose to keep the key decisions out of the Budget. In its second term, the Narendra Modi The government, which is fighting an acute economic slowdown, has been forced to announce a series of steps to accelerate the activity. Instead of waiting for the Budget, the government He decided to publicize the steps, including one of the most pronounced corporate tax reductions, months after submitting his first Budget in July 2019.
The series of steps announced by the government over the last few months would leave a Rs 2.9-lakh-crore impact on the exchequer, which is over 10% of the Centre’s Budget. Almost half of it is on account of a reduction in the corporation tax rate to 22%, along with a 15% levy on new manufacturing companies.
While it does impact the already strained fiscal situation, not all the outgo will take place during the current financial year. For instance, the income tax department is estimating a savings of up to a third of the tax reduction as all companies are yet to shift to the lower rate. Similarly, the new Rs 50,000-crore scheme to refund levies will kick in from next year and will replace a leakage-prone Merchandise Export from India Scheme (MEIS). Even the government ’s Rs 10,000-crore contribution to the proposed Rs 25,000-crore fund to revive stalled housing projects is unlikely to see an outgo in one shot, with at best a marginal amount of funds to be released during the current financial year.
In an interview, Sitharaman said the Modi administration has responded to the demands of various sectors. And, the steps have also shown that the Budget is no longer the only event to make key economic statements. Of course, some of the announcements of the finance minister, which had almost become a weekly affair in August and September, included a series of steps that should have been taken during the normal course of business.
In its first term, the BJPled government had moved ahead with the goods and services tax (GST), which took away the powers of the state legislature as well as Parliament to decide levies, ranging from excise duty, VAT and service tax on almost the entire set of items.
With a committee headed by the former member of the Central Board of Direct Taxes (CBDT) that presented a draft of the new income tax law, now all eyes are on Sitharaman to see if she presses for promulgation, That can put an end to the annual suspense on the reworking of the slab tax and increasing exemptions and deductions.