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Im against higher tax burden on middle class, Arun Jaitley says
November, 24th 2014

As he gets down to prepare the 2015-16 Union Budget, finance minister Arun Jaitley said on Saturday that he does not favour burdening the salaried and middle class with more taxes, but would go after the evaders in widening the net.

He also said he was against reducing the exemptions to widen the tax net. "Then that's not my approach," Jaitley told PTI.

"So I am quite willing, if I had my way and I had more money in my pocket, I would like to expand. But today the revenue position is challenging. Last time I gave several concessions, which were actually beyond my means," said the finance minister. Revenue receipts have remained sluggish against backdrop of an economic weakness.

The finance minister's comments indicate that the BJP government is unlikely to withdraw tax concessions on home loans and savings such as public provident fund deposits, moves that were being contemplated by the UPA regime.

Finance minister Arun Jaitley with Prime Minister Narendra Modi.

If at all, the government may actually increase the tax deductions that are available.

In his maiden Budget in July Jaitley had raised the exemption limit to Rs 2.5 lakh from Rs 2 lakh despite a tough fiscal situation. The minister has said the NDA government does not believe in a high tax economy and would prefer to put money in people's pocket to spur consumption.

'Lower taxation swells economic activity'

In a post Budget interview Jaitley had told TOI that he wanted to more money with the housewives to spur consumption and boost savings which can deployed for investment.

"It was because of my own and the PM's economic ideology that lower taxation will lead to more economic activity, more spending and more saving," he had said, a statement he reiterated on Saturday.

READ ALSO: Deal firmly with tax evaders, Jaitley says

In his interaction with PTI he said that the government will target evaders to widen the tax base.

"But it's all fine to bring those who evade tax under the tax net. But to bring this vulnerable section into the tax net, that can't be the policy today. In fact if you put additional money in their pockets and allow them to spend, then I collect correspondingly more indirect taxes so I will rather encourage more economic activity."

In fact, he would encourage more money being available with tax payers that will lead to spending and collection of more indirect taxes. "This widening of the tax base. What does it mean? ... I pay the same indirect tax as my attendant. Our volume of consumption may be different. So everybody is paying indirect taxes.

"And literally almost half your taxes are indirect taxes today. He pays excise, he pays customs duty, he pays service tax. Now as far as income tax is concerned, to bring those who evade tax is widening the tax net, I am all for it," the minister said.


Arun Jaitley with commerce minister Nirmala Sitharaman before presenting his first Union Budget earlier this year.

He was replying to a question on whether his Budget would look at widening the tax base to maximize revenue.

Jaitley, who will be presenting his first full Budget in February, said he would even raise the exemption limit further if he had more money.

"After all what are we talking about Rs 2.5 lakh today means, taking all the deductions which we have given, somebody up to Rs 3.5-4 lakh does not have to pay tax. So we have reached the situation broadly," he said.

"One earning Rs 35,000-40,000 per month, if the person puts some money for savings, (he) won't have to pay tax. But people falling in this bracket say that they don't save anything with salary of Rs 35,000-40,000 (with) the present cost of living, the transport cost, the fees of children and so on," Jaitley said.

READ ALSO: Govt will relook at tax treaties to unearth black money, Jaitley says

Therefore, the minister said, he was against reducing the exemptions to widen the tax net. "Then that's not my approach," he added.

"So, I am quite willing, if I had my way and I had more money in my pocket, I would like to expand. But today the revenue position is challenging. Last time I gave several concessions, which were actually beyond my means.

"But it's all fine to bring those who evade tax under the tax net. But to bring this vulnerable section into the tax net, that can't be the policy today. In fact if you put additional money in their pockets and allow them to spend, then I collect correspondingly more indirect taxes so I will rather encourage more economic activity."

On black money within the country, he said: "It is huge quantity and more easily traceable. Because you go to real estate, you go to land, you go to mining, you go to jewellery, you go to luxury goods, you will find the domestic (black money). You go to educational institutions, you will find it there. Therefore to trace out the buyers and the recipients is also easy," he said.

 
 
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