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Demystifying the process: Budget 2016

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By Amit Kapoor

New Delhi: The course of fiscal policy of the government is decided by the budget, which is an important document. This year too seems to be kick started with the halwa ceremony, renowned for commencing the printing of the budget documents on February 19.

Another unique feature of this year’s budget is that some of the key officials have communicated through a series of videos that aim to demystify the budgetary process. These videos also give a flavor about the essential features of the upcoming budget to be presented by FM Jaitley on February 29.

The key officials that have spoken before the budget announcement include the finance minister, the minister of state for finance, and the revenue and the economic affairs secretaries – and all have made some crucial points relating to the budget 2016.

The finance minister, in his interactions, had mentioned the use of technology to the advantage of all taxpayers. Already some 1.4 crore people have been notified of the budget refunds through the technology platforms and their refunds have been processed through the same medium. Roughly 90 percent of the budget filings are done online, and this is where the power of technology is making the tax process smooth and efficient.

The minister of state for finance, in his interaction, has mentioned that the budget will aim to reduce poverty, provide prosperity to farmers, help in job creation for the young people of the country and provide a better quality of life to all citizens. He also expressed his belief that India will continue to be a beacon of growth and stability in a very turbulent global environment.

The economic affairs secretary tried to demystify the budget process and mentioned that it is a long-term process as opposed to the common conception. It generally starts in September with a detailed circular being issued to all the ministries. Post this, in November and December, the Department of Expenditure holds meetings with various ministries about the requirements in the current and the next years.

At the beginning of January, the Department of Revenue makes its forecasts for the current year and the next year. There are the revised estimates for the current year and the budget estimates for the next year. Post this once the revenue and expenditure proposals converge, the finance minister holds consultations with various stakeholders and proposals are concretized at the end of January. Decisions are then taken and post this followed by printing of budget documents.

The economic affairs secretary also alluded to the fiscal deficit and how the government is looking at it. He too was upbeat about India’s performance amid global turbulence and said that budget has to focus on growth as it leads to job creation and economic development.

The revenue secretary, in his interaction, mentioned taxation and the broad structure of the budget. He stated that the total tax revenue projection is Rs.14.4 lakh crore. The income tax revenue is close to about Rs.7.9 lakh crore and the indirect tax revenue is close to Rs.6.5 lakh crore.

Within the income tax, there are two components – the corporate income tax and the personal income tax. The corporate income tax is around 59 percent while the personal income tax is around 41 percent.

On the indirect side, there are three major components: excise duties, customs and service tax. Normally these are roughly the same contribution, but this year, due to the oil duty, the excise duties are close to 39 percent while the other two form the remaining indirect taxes.

The service tax structure is diversified, which is a good thing. The direct side seems as having a shortfall of about Rs.40,000 crore as corporate earnings have been low but this will be compensated by the indirect side which is buoyant. The revenue secretary also alluded to ways and means to reduce the litigation that has been seen as a perennial problem for India’s corporate sector.

In the week ahead, a lot of haze will get cleared on the issues pertaining to the budget. The new media strategy seems to be a good initiative leading up to the budget. Overall the stage is set for a historic budget. It is also hoped that the government succeeds in the balancing act when Finance Minister Arun Jaitley presents the budget in the Lok Sabha at 11 am on February 29. (IANS)

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Finance Minister Appeals To Insist On Bill For Every Purchase

the government would start a three-digit consumer helpline number

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Finance Minister Appeals To Insist On Bill For Every Purchase
Finance Minister Appeals To Insist On Bill For Every Purchase. Flickr

Seeking consumers’ participation in curbing tax evasion, Finance Minister Piyush Goyal on the eve of completion of one year of GST rollout on Saturday appealed to them to insist on bill for every purchase saying it would help the government check evasion and reduce tax rate on each item by as much as 4-5 per cent. He further said the government would start a three-digit consumer helpline number to enable them to lodge complaint against erring traders or any other kind of tax evasion.

Touted as the biggest indirect tax reform since Independence, the Goods and Services Tax (GST) was rolled out last year on July 1. “I want to appeal to the people that they should demand a bill whenever they go to purchase any goods. If you start asking for a bill…if there’s awareness about this, then we can reduce rates by 4-5 per cent for every item (under GST),” Goyal told reporters here.

He said if any shop says that they will sell at a lower price if the consumer does not demand a bill, then the consumer should immediately file a complaint, he said. “We will soon provide a three-digit simple number which will work as a call centre where customers can complain. We will ensure full confidentiality of the complainant,” Goyal said. The endeavour will be to start the helpline number within 15-20 days, he said. A nationwide campaign too could be launched for creating consumer awareness about demanding bills for purchases made. “If everyone starts giving bill then competition will be on quality and customer service and not on ability to cheat the system,” Goyal said. He further said the government wants to reduce the burden of taxation on consumers but revenue needs to increase and support of states is also needed to cut rates where it is essential.

bills
bills owing. Flickr

With formalisation of economy, the government will have more elbow room to reduce rates, he said.

Also read: Out of Total Tax Fine of $15 billion, Apple Pays $1.77 billion to Irish Government

Goyal also assured small businesses if they face any trouble, then they can write to him and it would be resolved. He said amendments would be introduced to the GST law in monsoon session to increase composition scheme threshold from the current Rs 1 crore. The GST Council had last year decided to increase the threshold to Rs 1.5 crore and also decided to amend the law to increase the statutory threshold to Rs 2 crore. (IANS)