With Narendra Modi’s Finance Minister expected to be in office by next week, the Ministry has begun drafting components of the full budget 2014-15, likely to be presented in Parliament in early July. Taxpayers in the lower income-tax slabs can look forward to some relief.
The budget will be one of the first major statements of the Modi government’s policy thrust, especially on the agenda of economy revival.
The outgoing Finance Minister, P. Chidambaram, presented an >interim budget on February 17 .
At least three high-level officials in the Ministry told The Hindu that the budget ideas for the consideration of the new Finance Minster were being compiled from informal feedback, the Prime Minister-designate’s speech in Parliament on May 20 where he mentioned continuity in policy and the >BJP poll manifesto ; and inputs from industry lobbies.
“The FM just might even reject all of these points but the idea is to give him a head start,” said a source, adding there was a strong possibility that the new government would give some relief to income-tax payers, especially those salaried. As the scope for drastically increasing tax revenue is low given the economic slowdown, on the one hand, and the expenditure on subsidies and interest payments on government debt is mounting, on the other, the proposed strategy is to come up with innovative ideas for new sources of non-tax revenue.
Though it would need amendments to some Acts, the Ministry is seeking recourse to resources such as the Investor Protection Fund and the cess on coal and diesel. Also on the list is raising revenue from assets lying idle such as plantations and auction of natural resources. Some of the Ministry’s proposed new non-tax revenue sources fall within States’ jurisdiction. For instance, auctions for car VIP registration numbers. The Ministry is also proposing innovative user charges on public services such as for assured uninterrupted power supply. A strong case is being made for widening the tax net. One option is to tax agricultural income if it is less than 25 per cent of the total taxable income of an individual. A major expenditure reform to curb fiscal deficit is a graded move from subsidies to direct benefit transfers.
This could result in about 20 per cent savings on the subsidy bill.
