By IANS,
New Delhi : Reducing fiscal deficit is an imperative in the fight against high inflation, which touched 12.44 percent for the week ended July 26, a senior finance ministry official said here Wednesday.
“There is a need to increase the share of direct taxes by eliminating incentives and step up measures against direct tax evasion,” Revenue Secretary P.V. Bhide said.
Bhide, who was speaking at a seminar on taxes organised by the Federation of Indian Chambers of Commerce and Industry (Ficci), said fiscal deficit reduction had become important in view of rising inflation.
“Inflation is not only because of the domestic factors, but the global factors have also contributed significantly,” Bhide told reporters later.
He admitted the difficulty in minimising fiscal deficit in the short-term by cutting expenditure, and hence the need to increase revenue through direct taxes.
India’s total tax and gross domestic product (GDP) ratio is currently at 17.5 percent.
The finance ministry Wednesday said the direct tax collection stood at Rs.716.48 billion in April-July this year, which was an indication of “a buoyant economy”.
“The total direct tax collection during April-July 2008 is Rs.71,648 crore (Rs.716.48 billion) as against an amount of Rs.48,756 crore (Rs.487.56 billion) during the last corresponding period, growth of 46.95 percent,” the ministry said in a statement.
“The trend of direct tax collections is one of the many indicators of the health of the economy. The robust growth of direct tax collections by 47 percent in April-July 2008 is rather an indication of a buoyant economy,” it added.