Jaitley says budget seeks to put more money in the hands of the middle class through tax breaks

By Sarkaritel February 28, 2015 19:33

Jaitley says budget seeks to put more money in the hands of the middle class through tax breaks

Finance Minister Arun Jaitley addressing a Post Budget Press Conference

Finance Minister Arun Jaitley addressing a Post Budget Press Conference

By TN Ashok   Economic Affairs Editor

New Delhi, Feb 28: Finance Minister Arun Jaitley today said the Union Budget for 2015-16 sought to create confidence in the minds of both the domestic and foreign investors aimed at achieving greater GDP growth as the world was now looking towards it enthusiastically at a time when investment opportunities were closed elsewhere because global recession was yet to taper off.

Jaitley told a post budget press conference, attended by top officials of the finance ministry, the budget also sought to send a tough message to the tax evaders especially those who stashed black money in overseas accounts. “ For those who evade taxes, we have a tough message “, he said adding that the new law on Black Money and Benami Transactions coming up in parliament in the current session reflected government’s resolve to unearth black money and act tough with those who conceal income and dodge tax nets.

Key features of the new law to deal with Black Money stashed abroad were:

  • Evasion of taxation in relation to foreign assets to invite rigorous imprisonment of up to 10 years and carry penalty of 300% barring the offender to approach the Settlement Commission.
  • Non filing of return or filing with inadequate disclosures to invite rigorous imprisonment of up to six years. Undisclosed income from any foreign assets to be taxable at maximum marginal rate and there would be mandatory filing of return in respect of foreign asset.
  • Entities, banks, financial institutions including individuals are all liable for prosecution and penalty in this regard.
  • Other features include concealment of income/evasion if income in relation to a foreign asset to be made a predicate offence under Prevention of Money Laundering Act of 2002.

The Finance Minister said that one of the biggest challenges he and his officials in the ministry faced was on how to deal the redefined relations between Centre and states and the architecture of fiscal relations between them. A look at this was long overdue and the recommendations of the 14th Finance Commission in this regard were thus accepted.

Resources available to us (Centre) was declining, Jaitley pointed out saying the government had to work for higher growth within the limits of fiscal prudence. The anticipated growth rate (economic survey projections) was 8-8.5% which was possible to achieve and even enter double digits in subsequent years.

To a question on whether leakages in subsidies would be plugged as most states were ruled by the BJP, Jaitley said leakages is not a party issue. No political party is saying leakages in subsidies must continue. Since Oil and Diesel prices have been linked to market mechanisms, we have now brought the cash transfer system particularly in respect of LPG. We are also appealing to people particularly the richer class who don’t need subsidies to give up the subsidy benefit.

To a question on why no special mention had been made on allocation for the sethusamudram project, Jaitley said we will speak to the state government in this regard and take a decision.

To a question on whether government’s policy regarding strategic sale of assets in PSUs related to loss making PSU”s, Jaitley said we have a road map on dis investments in front of us. We will consider this but that is not to say that I have anyone or psu in mind at the moment now.

Jaitley replied with a caustic “Thanks” to a comment by former Prime Minister Dr Manmohan Singh that the budget lacked a clear road map for progress of the economy.

To a question on whether the increase in services tax from 12 .5% to 14% would not generate additional burden on this category of tax payers, Jaitley said the services sector was the largest contributor to the growth of the economy in recent years. He indicated that it was the right move to raise taxes in this sector to get additional revenues for the government kitty. Since the agriculture sector does not pay taxes, its part of social engineering to recover taxes from others such as services sector.

To a question on why there had been no reduction in MAT especially for SEZs, Jaitlye said what is not there in the budget is not there. The budget had to be balanced.

On why his budget did not contain any proposals for Big Bang reforms, Jaitley said, I have been asking people to come up with suggestions for big bang reforms and there has been no response.

To a repeated question on subsidies, Jaitlye said government is firm that subsidies will remain and continue. But leakages in subsidies will not continue. Subsidies will be rationalized. We are working on LPG. As many non-deserving categories are being looked into. Where we go further on subsidies, we will let you know.

ON why middle class expectations had been belied especially in relation to raising income tax exemption limit for individuals from Rs 2.50 lakhs to Rs 3.00 lakhs, Jaitley said the government’s intention has been to put more money into the pockets of the middle class. He pointed out that a lot of concessions had been granted to the middle class in terms of their investments in tax saving instruments. (Concessions to middle class as per budget estimates is about Rs 4, 40,000 per individual tax payer per year). Tax foregone is tax incentive for growth and the individual.

On what was the next move on introduction of GST, Jaitley said the empowered committee has to find a new chairman. Further legislation s have to be drafted in consultation with the empowered committee.

On the issue of withdrawal of exemptions to corporate sector in lieu of reduced corporate tax, The Finance Minister pointed out that the country had been pursuing a high tax economy, ASEAN countries have a much lower rate of taxation. Because of exemptions our realization has been very low. Can we bring down central taxes is what we are now looking at, he said.

On the issue of special concessions for Bihar, Jaitley said there were no special concessions but what was being extended to Andhra Pradesh/Telangana  was now being made applicable to the state which was once rich in mineral resources and neighboring states had abundant resources.

We are extending what we extended to Andhra Pradesh. That is an additional investment allowance of 15% and additional depreciation of 15% to new manufacturing units set up in notified areas, he said.

By Sarkaritel February 28, 2015 19:33