Delivering its promise to bring down taxes to ASEAN level, government on Tuesday slashed customs duties from a peak of 15 per cent to 12.5 per cent and reduced excise on a number of items and yet hoped to achieve higher tax revenue through better compliance.
Keeping income tax rates unchanged and diluting the provisions of Fringe Benefit Tax, Union Finance Minister P Chidambaram sought to enlarge the tax base by including more services under the tax net and increased the services tax from 10 to 12 per cent.
In the process, the overall tax revenue, including the new proposals, would surge by 19.49 per cent to Rs 4,42,153 crore next fiscal from Rs 3,70,025 crore estimated this fiscal as per budget estimates.
Compared to revised estimates of Rs 3,70,141 crore for this fiscal, the gross tax revenue is estimated to increase by 19.45 per cent next fiscal.
"Government estimates that through better tax administration, it will increase gross-tax GDP ratio to 11.2 per cent in 2006-07 as per budget estimates from 10.5 per cent in 2005-06 according to the revised estimates," Chidambaram said in his budget speech in the Lok Sabha.
After deducting state's share in tax revenue and transfers to National Calamity Contingency Fund, net tax revenue was estimated to be up by 19.65 per cent to Rs 3,27,205 crore during 2006-07 from Rs 2,73,466 crore during 2005-06 (budget estimates), the FM said.
{{/usCountry}}After deducting state's share in tax revenue and transfers to National Calamity Contingency Fund, net tax revenue was estimated to be up by 19.65 per cent to Rs 3,27,205 crore during 2006-07 from Rs 2,73,466 crore during 2005-06 (budget estimates), the FM said.
{{/usCountry}}Chidambaram said his proposals on direct taxes were estimated to yield a gain of about Rs 4,000 crore, while on the indirect taxes, the gain is estimated at Rs 2,000 crore.