Finance Minister Arun Jaitley has announced that the there will be no changes to the present income tax rates. Of the 1.89 crore returns filed last year, and Rs.1.44 lakh crore paid as income tax, the lion's share comes from the salaried class.
The growth rate of direct taxes in 2016-17 and 2017-18 have been significant. A growth of 12.6% was recorded last year, and till January 2018 it was 18.7%.
The share of personal income tax in the total tax income of the government has been on a steady increase as the tax base has widened.
New taxpayers numbering 85.51 lakh have filed their returns. The number of effective taxpayers has increased from 6.47 lakh crore to 8.27 lakh crore. The excess revenue from personal income tax is ₹90,000 crore.
The share of income tax in the gross tax kitty has risen from 17.9% in 2005, to 23.08% in 2017. Taxpayers' contribution to the government treasury was 19.76% in 2015, after the NDA came to power in 2014. After an initial dip, the share of income tax has risen year-on-year.
There has been a corresponding slide in the contribution of the corporate sector to the government treasury, with the share of corporate tax at 28.18% in 2017, from 34.45% in 2014. Corporate tax has now been reduced to 25% for companies who have a turnover up to Rs.250 crore.
Estimates of revenue foregone due to this measure is Rs.7,000 crore. Long term capital gains tax of 10% is proposed for amounts exceeding Rs.1 lakh.
In his budget speech, Arun Jaitley said that the government will be making a calibrated departure from the extant policy of gradually reducing customs duty. Customs duty on mobile phones and parts of televisions will be increased to 20%. Customs duty on raw cashew will be reduced from 5% to 2.5%.
Customs duty accounted for 17.35% of the total tax collections in 2005. The levy of customs duty has been historically on the wane as the government moved away from protectionist posturing in the face of globalisation of the supply chain. The share of customs duty fell from its 2005 level, to 12.82% in 2017.
Similarly, the share of excise duty to the tax kitty halved from its 2005 level of 30.26% to 16.38% in 2011. However, policy changes have since seen the contribution of excise duty rise to 21.29% in 2017.
Both customs and excise duties are indirect taxes. The primary difference between the two is that customs duty is collected on goods which are manufactured outside the country while excise duty pertains to fees levied on goods that manufactured locally, and are not meant for export.
Customs duty is variable for different commodities. The rate of taxation of sin goods such as alcohol and tobacco, is very high, while the tax policy pertaining to white goods and industrial parts, takes into account competitive pricing and anti-dumping norms.
