Finance Minister Nirmala Sitharaman said the Union government has not burdened the common man with taxes to fund the recovery through taxes during the Covid-19 pandemic. She said 32 countries across the world, including several developed nations, increased taxes to steer their economy affected by the pandemic.
Sitharaman was replying to the discussion on the finance bill. It was passed in the Lok Sabha, thus marking the completion of the budget exercise.
“It very clearly said that at least 32 countries increased various tax rates during the pandemic. India did not. Thirty-two countries, during the pandemic increased personal income tax, or tax on corporate income; or environmental related taxes were raised; or health related taxes were raised; or excise duties were raised,” she said, as the opposition hit out at the government on a host of issues ranging from inflation to lack of relief for the middle class or the common man.
“Large countries like Germany, France, Canada, UK and Russia apart from very many smaller economies, all of them depended on increasing taxation to meet the demands of the Covid-19 pandemic and also the recovery requirements,” the minister said.
Addressing the concerns that government gave no relief to the middle class but cut corporate taxes in recent years, Sitharaman said the cut in corporate taxes had actually led to increase in tax collection for the government.
“The corporate tax reductions have actually helped the economy. In the year 2018-19, our corporate tax collection was about Rs. 6.6 lakh crore. In spite of tax reduction and Covid-19, we have already collected corporate tax of Rs. 7.3 lakh crore till yesterday. So, the reduction in corporate tax has actually now given us the reward in spite of the intervening year being under Covid-19,” the FM said.
Reacting to criticism over increase in customs duty on umbrellas, Sitharaman said it was being done to help the indigenous industry.
“Umbrellas are manufactured in India and nearly 25 million pieces of individual umbrellas are imported every year into this country. These 25 million pieces of umbrella were being imported from one country. Can we not manufacture it? Can we not strengthen our manufacturing? So, we have imposed this custom duty. This is only to encourage the MSMEs which are producing It.”
The government’s announcement on cryptocurrency and digital currency led to members asking the government if that was leading to ambiguity. Sitharaman said the consultation were going on whether we want to regulate it fully or we want to regulate it to some extent or we want to totally ban it.
In the meantime, till consultations are complete, the government will deduct TDS. “Government made its position clear saying, we shall tax the money being generated out of it and that is why, we have come out with the proposal to tax it at 30 per cent and the TDS has also been brought in. As always, TDS is more for tracking; it is not an additional tax, it is not a new tax, it is a tax which is going to help people to track it.”
Referring to points being raised on taxation and black money, the finance minister said the government has widened the net.
“We had only about 5 crore and odd people who were paying taxes in 2014. We are now touching 9.1 crore people and that is because we are able to find the money trail of people who seem to be spending money, who file assessments sometimes, but they do not pay even if they are expected to pay. So, TDS is always a legitimate way through which we are tracking the transactions and, therefore, it is helpful to widen the tax base.”
Referring to the Congress’s criticism over rising prices, Sitharaman cited examples of first PM Jawaharlal Nehru and PM Indira Gandhi about the speeches they gave in Parliament justifying price rise and increase in taxes.
“The Ukraine war has impacted all the countries. The supply chains are disrupted, particularly, of crude oil and so on. In 1951, Pandit Jawaharlal Nehru said that a Korean war can affect Indian inflation. I will have to say this because war anywhere can affect us. Today, in a globally connected day, it will, definitely, affect.”
Comparing her government and the Congress regimes, Sitharaman said Narendra Modi, as the prime minister, and a chief minister have strongly believed in lowering taxes and reducing the burden on common man.
“I would like to compare what prevailed earlier and what is today. In the Union Budget Speech of February 28, 1970, the then prime minister, Shrimati Indira Gandhi, who also held the Finance Minister’s Office at that time, announced to increase the marginal tax rate by 11 percentage points to 93.5 per cent on all income groups above Rs 2 lakh.
“There was 93.5 per cent tax. And, today when we do 1 per cent TDS, we are being mocked at, we are being hit at. As per our current tax slabs, the highest tax slab for those earning more than Rs 10 lakh is just 30 per cent. Under the new and optional tax slabs announced in 2020, this rate is 30 per cent which would apply to the earnings of more than Rs 15 lakh. So, tax is a matter on which the Congress party never thought of reducing the common man’s burden.”