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TMI BlogExtracts from the reply of the Finance Minister to the debate in the Lok Sabha on the Finance Bill, 2008X X X X Extracts X X X X X X X X Extracts X X X X ..... Extracts from the reply of the Finance Minister to the debate in the Lok Sabha on the Finance Bill, 2008 - News and Press Release Dated:- 29-4-2008 - News - The following is the extracts of the speech made by the Union Finance Minister, Shri P Chidambaram while replying to the debate on the Finance Bill, in the Lok Sabha, here today. Direct Taxes Since the presentation of the Budget on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29 th February, 2008 I have received a number of suggestions from Hon'ble Members of Parliament, various associations, trade and industry, on the proposals in the Finance Bill, 2008. I have also taken note of the valuable suggestions made by the Hon'ble Members of Parliament during the debate in the House over the last two days. In general, Members of Parliament have welcomed the relief in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various tax rates, but seem to have reservation on the proposals which envisage expansion in the tax base. 2. Sir, before I reply to the specific points raised in the House during the debate, I would like to touch upon the philosophy underlying the tax reform initiated by the UPA Government. I wish to quote the CMP: "[The UPA Government] will initiate measures to increase the tax: GDP ratio by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaking major tax reforms that expand the base of tax payers, increase tax compliance and make the tax administration more efficient. Tax rates will be stable and conducive to growth, compliance and investment." 3. Let us measure the achievement of this Government against these goals. The tax : GDP ratio had indeed increased from 9.2 per cent in 2003-04 to 12.5 per cent at the end of 2007-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The base of tax payers has also increased: the number of assessees has increased from 3,01,78,000 in 2003-04 to 3,25,00,000 in 2007-08. Compliance has also increased, as will be evident from the rate of growth of gross tax revenues. In the four years of the UPA Government, gross tax revenues have increased by 19.9 per cent, 20.1 per cent, 29.3 per cent and 25 per cent (provisional) over the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year. The tax administration had indeed become more efficient. The cost of tax collection on the direct taxes side is 60 paise per Rs.100 and on indirect taxes side, 65 paise per Rs.100. As has been acknowledged by many Honourable Members, the cost of collection is perhaps among the lowest in the world. 4. There is of course another point of view that the Government must impose a higher t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax burden on the rich. The marginal rate of tax on an individual or a corporate, including education cess, is 33.99 per cent. Besides, it is the corporate sector which pays the bulk of customs duties and excise duties. My endeavour has been to increase the effective rate of corporate tax paid by corporations, but my efforts are stalled because of demands for continuing exemptions or introducing n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew exemptions. I think I would not be revealing any secret if I say that every request for exemption has the support of one or more Members of this House, irrespective of political affiliations. In my view, the way forward is not to increase tax rates but to remove the exemptions. In the last four years, I have succeeded to some extent in removing exemptions or imposing sunset clauses, but I canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t say that I am fully satisfied. Work on this regard would have to continue. Eventually, we would have to move towards a system of taxation where the exemptions are few, each exemption is reviewed periodically and each exemption comes to an end after a reasonable period of time. I am confident that the new Income Tax Code that will be placed in the public domain for discussion will reflect my phil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osophy in this regard and I hope that, in due course, the new Income Tax Code will, after deliberations, become law. - News - Press release - PIB Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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