The Covid pandemic has affected private investment in FY21, but there would be new investments in the coming months, he added.While the Centre’s tax revenues in FY21 would be higher by than the revised estimate (RE) by a wide margin, its budgetary expenditure will also exceed the respective RE and yet, the fiscal deficit would be a little lower than 9.5% of GDP projected, revenue and economic affairs secretary Tarun Bajaj told FE.
“As the figures are coming in, we will exceed the RE (for tax receipts) by a good number in spite of the fact that income tax refund has been about Rs 70,000 crore more in FY21 than the previous year. We will exceed REs in both direct taxes and indirect taxes,” Bajaj said.
The revised estimate for budget expenditure is Rs 34.5 lakh crore, an increase of 28.4% on year. With net tax revenue (NTR) rising by 9.1% on year in April-February against (-) 0.9% projected for the full year, FY21 NTR is seen to overshoot the revised estimate of Rs 13.4 lakh crore by a good margin.
Asked whether there is any evidence of the sharp cut in corporate tax rate prompting companies to make new investments, the official said it was difficult to draw any conclusion as of now. “Mobile companies are expanding, one can’t say whether they are expanding because of corporate tax structure or because of the production-linked incentive (PLI) scheme,” he said.
In FY20, the government cut the effective corporate tax rate to 25.17% from 34.94% (for new units, the rate is just 17.01%). The Covid pandemic has affected private investment in FY21, but there would be new investments in the coming months, he added.
On whether the recent GST revenue growth was organic or an outcome of enforcement, anti-evasion steps, including through use of data analytics, Bajaj said it was due to the combination of both – the ease of filing of returns and data analytics. “We are now using technology to catch unscrupulous people. We are using technology for auto-populating information. Now the businessmen know that data is auto-populated, that itself acts as a check. That is helping.”
From a monthly low of just over Rs 32,000 crore in April 2020, gross goods and services tax (GST) collections had gradually picked up; since September 2020, the mop-up has been higher than the year-ago levels and for the last six months, the revenues have been above the Rs 1-lakh-crore mark. Gross GST collections came in March is at a record at Rs 1,23,902 crore.
With the prospect of government needing to cough up tens of thousands of crores of rupees over the next few months towards honouring the claims of refunds of the 10% ‘royalty tax’ to scores of non-resident software suppliers to Indian companies, following the recent Supreme Court (SC) ruling, the Centre is exploring legal options. “We are seeing what legal options we have,” Bajaj said when asked whether the government exploring options to tweak the domestic tax law to overcome the SC judgment.
Budgetary expenditure will exceeding the RE will be due to higher spending in recent months – spending grew 48%, 29%, 49% and 53%, respectively, in November, December, January and February, according to data released by the Controller General of Accounts (CGA) on Wednesday. Of course, lumpy items like clearance of fertiliser subsidy arrears and release of dues to FCI (due to the shifting of this below-the-line food subsidy to the Budget), also must have led to elevated spending in the last quarter of the fiscal.
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