Deputy chief minister Manish Sisodia said the Delhi government has strengthened its financial position despite the global slowdown and domestic economic uncertainty. An honest government, its honest officers, and the intent to plug leakages bucked the trend, he said.
Stating that his government expected a growth of 17% in tax revenue in 2015-16 as compared to 2.64% during 2014-15, Sisodia said the tax revenue has been augmented by controlling leakage of resources and overcoming the economic slowdown through additional resource mobilisation.
“I would like to reiterate what our chief minister has previously stated. There isn’t a shortage of financial resources in the government. However, there was a shortage of integrity and honesty. Therefore, in this financial year, we have seen a historic growth of 17% in tax revenue, 31% in state excise and 21% in stamp duty,” Sisodia said while presenting his budget in Delhi assembly on Monday.
While Sisodia, who also holds the finance portfolio, said tax rationalisation has been done to ensure a ‘just tax regime’ and maintain uniformity with neighbouring states, the focus of the government is on “ensuring voluntary compliance instead of stressing enforcement for tax collection”.
Sisodia cited the example of Bill Banwao Inaam Pao scheme to prove the growing people’s participation and the efforts to plug tax evasion. “The increasing success of the scheme can be measured from the fact that 8,000 entries have been received in the month of February 2016 as against 4,000 entries in the month of January 2016 when the scheme was launched,” he added.
With an aim to make traders a partner in tax compliance and revenue augmentation, Sisodia also announced a new Reward Scheme for traders, as reported by HT on Monday.
“It is to acknowledge and further encourage market and trade associations contributing revenue over and above the targets set for the year. Such associations will get 10% of the revenue generated over and above the target set for the year. The award money is to be utilised for the overall improvement of the market and maintenance of public conveniences, beautification, repairs etc.” Sisodia said.
With the government claiming buoyancy in tax collection, the Delhi government decided to pass on the benefits to the people and reduce VAT rates on several items. Chief minister Arvind Kejriwal said his government is “commited to bring down VAT rates to the lowest in the country in five years”.
Despite having failed to achieve the budgetary tax collection targets of Rs 24,000 crore, the government set an ambitious target of Rs 24,500 crore for 2016-17.
Replying to a question on how the government intends to meet the target, especially when tax rates have been reduced, Kejriwal said he has “full faith’ in people and traders who would adhere to tax compliance.
Agreeing to the long-term demand of budget hotel owners, the finance minister proposed to increase the threshold limit of luxury tax from existing Rs 750 to Rs 1,500 per day per room. Besides, giving a fillip to the hotel business, even consumers will benefit as the traders are expected to pass on the relief in taxation.
Budget hotel owners’ association welcomed the decision and said that they were expecting a higher threshold limits. Delhi Hotel Mahasangh General secretary Arun Gupta the relief in luxury tax is not sufficient as neighbouring towns in NCR, the threshold limit is Rs 3,000. “In Delhi, it should have been between Rs 2,000 to Rs 2,500” he said.