Formalisation of economy led to tax buoyancy: Revenue secy to HT

Revenue Secretary Sanjay Malhotra supports using technology to improve the ease of doing business and prevent tax evasion.

Revenue secretary Sanjay Malhotra, an engineering graduate in computer science from Indian Institute of Technology (IIT) Kanpur, is in favour of using technology to boost ease of doing business and check tax evasion in advance. Speaking to Rajeev Jayaswal, he explained how the government is widening and deepening the tax base without raising rates. Edited excerpts from an interview:

Union revenue secretary Sanjay Malhotra (PTI)

Indian manufacturers are facing duty inversion after recent free trade agreements that reduced duty on finished goods, but their components still attract higher duties, making domestically manufactured goods uncompetitive.

We comprehensively review matters related to customs duty in the regular budget. As you see, we have not made any changes in customs duty in the interim budget. This is something which would be done in the regular budget after stakeholder consultation.

There are big multinational companies such as electrical vehicle and mobile phone manufacturers that want to set up units in India provided the government gives them import duty concessions. Are you considering any such proposals?

So far as electric vehicles are concerned, there is no such proposal with me. On mobile (components), we recently changed, which was more a measure of simplification. That was not so much a measure of reduction. It was not because we wanted to reduce (duty) and thereby make manufacturing competitive. Even revenue implication was very small. It was prompted by ease of doing business. Duty of all items was aligned to 10% to avoid classification disputes, so you don’t spend your time, energy, effort and money on lawyers in fighting disputes. All parts [are now] at 10%, other than mobile chargers [at 20%] and mobile PCBs [printed circuit boards at 20%]. That is the simplification we have made.

There is a buoyancy in tax revenue so far. Will you mop up more than the revised estimates for 2023-24? What will be the situation in the next financial year?

Estimates were prepared based on the 10-month figures. Now only two months are left in this financial year. However, we are confident that we will meet the revised estimate target of ₹34.37 lakh crore in 2023-24, which is upwardly revised from ₹33.60 lakh crore in the budget estimate. Our next year’s target is ₹38.30 lakh crore, about 11.5% up from the revised of 2023-24, which is also realistic.

What are the factors that will help you in collecting ₹76,353 crore more in 2023-24 without raising tax rates?

It’s a combination of so many factors -- better use of technology, third-party information, better compliance, providing facilities like 26AS (which provides a complete profile of the taxpayer for a particular year), updated return and simplification in tax structure. A number of measures has been taken to plug leakages in revenue. And, formalisation of the economy and use of technology have led to tax buoyancy.

The interim budget announced withdrawal of notices pertaining to old tax demands. Could you please elaborate how this could be availed?

The taxpayer is not required to do anything. We have decided to remove entries from our tax demand register for up to an aggregate of ₹1 lakh per person pertaining to period up to 2009-10 (up to ₹25,000) and from 2010-11 to 2014-15 (up to ₹10,000). This will help us in further reducing our returns processing time. The finance minister has said the average processing time of returns has been reduced from 93 days in the year 2013-14 to a mere 10 days this year, thereby making refunds faster.

Will taxpayers be informed that their old issue has been settled? When will it be implemented?

We are working on the scheme and this is a good suggestion that will be considered. Taxpayers should also know that their old issue is settled. We plan to launch it as soon as possible in two to three months.

The government introduced a simplified tax regime with lower tax rate, provided taxpayers forgo exemptions, which is for both corporate and individual taxpayers. What is the response?

In 2019, the corporate tax rate was reduced to 22% without any exemptions and deductions. There has been good response; 57% of the total tax revenue from corporate tax today is from this simplified regime. So far as PIT (personal income-tax) is concerned, it is too early because it has been made attractive only last year. Before that it did not take off so well. So, after we get the returns till July next year, only then we will be able to know as to what is the response to the new or revised simplified personal income-tax regime.