New Delhi : As he gets ready to present his seventh national budget next month, Finance Minister P. Chidambaram Tuesday said fiscal deficit targets for this year will be met and held out an assurance of moderation of taxes rates, if compliance was met.
“Let me recall what I said. If voluntary compliance increases, then there is a case for moderation,” Chidambaram said. “That does not mean it’s been accepted. You make a case for moderation instead of writing imaginary stories.”
The finance minister also drew comfort from the fact that tax collections this year were healthy. “In April-December, the growth in corporate tax collection is better at 40 percent and personal income tax at 50 percent.”
With the Indian economy booming at around nine percent and the manufacturing sector along with services triggering the growth, direct and indirect tax mobilisation was more or less on anticipated lines, he said.
“Service tax and customs collections are more or less on target. There was some shortfall in excise collections,” he said. Likewise, corporate tax grew 39.84 percent and personal income tax went up by 50.06 percent.
The finance minister said this would help in meeting the fiscal and revenue deficit targets for the current fiscal, set at 3.3 percent and 1.5 percent of gross domestic product (GDP) from 3.7 percent 2 percent last fiscal.
Chidambaram will be presenting the fifth budget for the United Progressive Alliance government on Feb 29 and his seventh as finance minister.
Speaking about rationalisation of the tax system, the finance minister said the draft paper on Income Tax Code to simplify and replace the existing legislation, as also explain the rationale behind the exercise, was ready.
“The code is ready. But I am not in a position to release it because I have decided I will release it along with a discussion paper,” Chidambaram said and added that the code presented to him ran into some 70 pages.
The finance minister also indicated that he would have a new advisor soon in place of Parthasarathi Shome, who resigned last month and will serve the ministry till next week.
He, however, declined to dwell into who would fill in that position. Nor was he willing to give a specific time frame.