Tax changes possible without budget session, says Chidambaram
December, 30th 2013
There is no concept that changes can be made to taxation system in a vote-on-account, Finance Minister P Chidambaram today told CNBC TV18 in an interview, an indication that the government might be thinking of bringing in the much awaited tax reforms in the forthcoming Parliament session. He said direct, indirect taxes can be changed in a vote-on-account and there have been such instances in the past.
A vote on account is a Parliament session wherein an outgoing government gets approval of the House for the money to be expended until the new government is formed and a full budget is presented. This year the UPA government will have to go for a vote-on-account as elections are round the corner.
AFP. Usually, such a session deals only with the vote for the finances since it is deemed inappropriate for a government to take policy decisions, especially those related to taxes, just before the elections. With the UPA failing to take up Direct Tax Code and Goods and Services Tax until now, there were concerns that these tax reforms, which are expected to boost the economic growth and government’s tax revenue, may have been shelved for the next couple of years or more.
Chidambaram’s statement today may be an indication that the UPA government is toying with the idea of taking up these long-pending tax reforms in the vote on account. However, he said he has not made up his mind on presenting the DTC and GST in the vote-on-account. He said current account deficit for the current financial year will be lower than $50 billion and also the restrictions on gold are the right move, which will continue.
The finance minister also said it is clear that fruits, vegetables, eggs and meat prices are fuelling the inflation. Monetary policy impacts only manufacturing inflation, which has come down to 2.64 percent. He hoped the changes in Agricultural Produce Marketing Committee Act will bring down the prices of fruits and vegetables, which will give room for the Reserve Bank of India to ease monetary policy easing.
He also allayed fears that the government may miss the fiscal deficit target of 4.8 percent of GDP. He, however, sounded uncertain about the future of fuel subsidy. He said the 50 paise monthly increase in diesel prices is the right move and denied any political pressure on him to roll back any of the fuel reform measures taken until now.