Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: cpt :: VAT Audit :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: TDS :: form 3cd :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: ACCOUNTING STANDARD
 
 
Budget Extravaganza »
 How Union Budget 2018 impacts individual taxpayers
  How Budget 2018 will be different due to GST
 This is how Budget 2018 announcements may help you save tax
 Here's why the government advanced the Budget date
 Will Budget 2018 Reduce Your Income Tax? 10 Expectations
 How Budget 2018 will be different due to GST
 Will Budget 2018 cut tax on switch from dividend to growth option in mutual funds?
 Startup eco-system looks forward to the budget for addressing tax dilemma
 High time to prioritise non-tax revenue in the Budget
 Govt may abolish dividend distribution tax in budget
 Budget making in the GST era: paradigm shift
 Budget 2018: Section 80C limit may be increased
 Middle Class Can Hope For A Big Tax Relief In Budget 2018-19, Says Report
 Startup investors seek abolition of angel tax in Budget 2018-19
 Budget 2018 must avoid the temptation to bolster government revenues myopically

High time to prioritise non-tax revenue in the Budget
January, 17th 2018

Budget-making is difficult at the best of times. So many demands, so few sources of income. For GoI, the need to raise revenues with a tightening fiscal policy — increasing taxes — is counterproductive, while cutting expenditure will slow down growth and investments.

Essentially, GoI has three sources of revenues: direct taxes, indirect taxes and non-tax revenues. For this year, the indirect taxes will play a much smaller role since it will be the GST Council that will be deciding indirect taxes, with the finance minister working with direct taxes and nontax revenues.

Rising oil prices and non-existent private sector investments make this year especially challenging. GoI has to proactively push the envelope in terms of capex and other expenditures. Non-defence capital expenditure over the last 10 years has grown by a compound annual growth rate (CAGR) of less than 10%.

Last year saw a healthy growth in capex and GoI must continue the momentum this year. Not only will this help boost the economy, but it will also drive a crowding-in effect for private sector investment. However, any increase in expenditure has to be countervailed by a proportionate increase in government revenues. Failure to do so could offset the fiscal deficit balance.

On the tax side, GoI introduced GST. Once its teething problems smoothen out, tax collections will rise further. Raising direct taxes to generate higher revenues, however, can be counterproductive. A rise will further slow private expenditure down, forcing GoI to spend more. This could lead to a vicious cycle of higher taxes and overdependence on government spending. Instead, why not aggressively push for a rise in nontax revenues?

Non-tax revenues as a percentage of total revenues have been budgeted at around 23% this year, lower than the 26% and 25% in 2017 and 2016 respectively. There is also a high chance that the actual number may be even lower. In fact, we have achieved less than 90% of our budgeted target for non-tax revenues in three of the last six years. This lack of predictability creates problems for GoI as it necessitates cost-cutting or increasing taxes to maintain the fiscal deficit target.

It's high time we accord non-tax revenues the priority they deserve. A structured, long-term plan will not only outline the course of action but also help provide predictability to the earnings from non-tax revenues. The huge response to the Bharat 22 exchange-traded fund (ETF) this year proved that non-tax revenues can yield wonderful results if implemented in a thoughtful manner.

The most important vector in this will be the monetisation of government assets: real estate, telecom spectrum and equity stake in different PSUs. This selling of assets is an investment for the future, which needs to be done through a structure that maximises value for GoI. A possible fund, on the lines of sovereign wealth funds, can be considered. It could then monetise these assets, while simultaneously investing in areas to generate investment returns.

Such a fund could also enter into public-private partnerships (PPPs) for large public sector investments, including bank recapitalisation, infrastructure projects and social investing. Such ventures could help direct investment into capital-intensive projects without requiring explicit GoI funding. GoI can mandate a minimum target inflow from the fund towards the government every year to ensure its revenue requirements are met.

Various ministries, like transportation and railways, have recently announced that they will monetise their assets and will not have to rely solely on budgetary support for their investments. Similarly, GoI should plan to auction property assets to raise money. It also has access to sources such as unclaimed dividends and deposits. A list of options and modes of raising non-tax revenues could be made, along with a well-thought-out long-term plan for raising resources from these sources.

GoI has done well to implement taxside reforms in the form of GST that will enhance the tax revenues in the long term. A similar reforms-oriented approach towards non-tax revenues can help it do a better job at balancing the fiscal deficit and public expenditure, ensuring that the growth momentum is not lost.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System development CMS development Content Management Solutions CMS Solutions Content Management Services CMS Services CMS Software

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions