collections have grown by a mere 5 per cent. This means collections need to rise by over 27 per cent in the next half to meet the Budget projections of 17.3 per cent growth rate, compared to actual collections in 2018-19.
The government has set a direct tax collection target of Rs 13.35 trillion, which includes Rs 7.66 trillion from corporation tax and Rs 5.69 trillion from personal income tax (I-T).
On slashing corporation tax rates, he said, “Corporate taxation in India is a bit higher than international standards, particularly when you compare with the emerging economies and with the neighbouring Asian and South Asian economies. So reduction in tax rates is called for, a change in the way of corporate taxation is called for, as there have been too many complexities introduced year after year.”
He said the government is seized of the matter and Finance Minister Nirmala Sitharaman has also reiterated recently that there is some need for corporate tax reduction.
“That has been reiterated by the finance minister recently that we are moving towards a lower rate and I am sure that will happen sooner or later. The government has already said there is need for some corporate tax rate reduction,” said Ranjan.
He said taxpayers in the country should not see paying I-T as a burden. “The moment he starts feeling this tax is something which the government has the right to ask for, then compliance starts and that’s the basic principle,” he said.
On the direct tax code report, which has been submitted to the government, Ranjan said, “The report has not been (made) public, so I won’t be able to give any details on that. But the broad trends are that we have obviously focused on compliance.”
Compliance is the cornerstone of any tax policy and it has different aspects. It is not just about tax rates but also about ease of filing, about modernising the tax system, improving litigation system management as well as making tax law more comprehensible and organised, he added.
“So that’s what the direct tax code has tried to do — to come out with the non-disrupting established concepts. Carrying on with the policy that has already been laid down by the government and try to remove distortions, remove the complexities that have crept in over the years. The simplicity, comprehensiveness should encourage people (to pay taxes) — that is the plan,” he said.