Revenue targets for indirect taxes for the 2014/15 financial year are challenging but achievable, Arun Jaitley, India's finance minister said on August 11, 2014, urging senior revenue officials to perform the dual role of facilitating tax collection and reducing tax evasion.
Addressing senior officers of the Central Board of Excise and Customs (CBEC) after inaugurating a two-day annual conference of Chief Commissioners and Director Generals of Customs, Central Excise, and Service Tax, Jaitley said that the "last few years have been somewhat difficult as far as the Indian economy is concerned," and "were coupled with either a static or negative growth rate especially in manufacturing, [and] as a result some of the indirect taxes took the hit."
The Government hopes to achieve a 25 percent increase in indirect tax collections this year. Discussing ways to boost consumption tax revenues, Jaitley said: "The cost of tax collection, both in case of direct and indirect taxes in our country, is not very high and further investment in strengthening the tax infrastructure in the country will bring better returns to the exchequer of the Government."
He stressed the need to reduce tax litigation and facilitate trade. Jaitley said that the government will favor trade facilitation to substantially reduce transactional costs for businesses, adding that "a large number of irritants created in the tax administration have been consciously addressed."
Shaktikanta Das, Secretary (Revenue), noted that the growth in the first quarter in indirect tax collections was 4.5 percent, but in June 2014, the growth was 13.5 percent overall. Sales tax growth of 28 percent was reported – above targets. He said: "It is in our interest to improve trade facilitation measures because they are ultimately going to be beneficial for ourselves."
Shanti Sundharam, CBEC Chairperson, added: "It is our endeavor to create a culture which encourages maximum voluntary tax compliance, and nurtures a predictable, credible, and stable tax regime. CBEC recognizes the importance of providing a non-adversarial regime and a tax design for our taxpayers, which complements the country's economic realities and business practices," adding that steps are being taken "to reduce litigation and institutionalize consultative mechanisms."
"The newly introduced provisions for pre-deposit, as also the amendments in the provisions for settlement commission and advance rulings would expedite the dispute resolution process," she said.
Looking ahead, she underscored the importance of the implementation of the goods and services tax, which remains the Government's top priority, and which she said will be a "game changing reform."
Implementation of a nationwide GST would introduce a simple, internationally-accepted tax regime to broaden the tax base and enable the country to lower trade tariffs. GST would replace the central sales tax, the state sales tax, entertainment tax, lottery tax, electricity duty, and value-added tax.