The government is looking at increasing revenue through direct tax collections and eliminating incentives and exemptions said Revenue Secretary PV Bhide at a Ficci seminar in the capital today. The government is not in favour of raising indirect tax collections as they add to inflation. The only option for the government is to increase revenues through the collection of direct taxes, he said. Incentives and exemptions on the other hand add to the cost of tax compliance, raised inequity and caused loss of revenue to the government. The government aims to restrict the fiscal deficit to 2.5% of GDP this year. But with ballooning food and oil imports, a higher wage bill on account of the latest Pay Commission recommendations, farm loan waiver and subsidies, there is serious doubt expressed on whether the government will be able to meet its target. The Revenue Secretary added that the government was on track to introduce GST by April 1, 2010. He informed that the state were looking at a rate of between 16 to 20% and are still not unanimous on the issue but were on the same page as far as the application of GST was concerned. The empowered committee of state finance minister has submitted its report. We are presently considering the same, he said. With a worsening fiscal situation and rising inflation the government is paying serious attention to spruce up its tax administration process. With an aim to make the tax returns more transparent and error free the government is looking at more and more use of technology. We aim to make the first level of assessment free of the human interface over the next two to three years, said Bhide. Companies and individuals would do well to get ready for a tighter tax policy and also get used to life without incentives and exemptions.