Lok Sabha passes Finance Bill 2022; FM blames Russia-Ukraine conflict for rising fuel prices

The discussion on the Bill took place by deferring the time usually allotted for private members’ bills in the House

March 25, 2022 07:14 pm | Updated 07:54 pm IST - NEW DELHI

Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha during the second part of Budget Session of Parliament, in New Delhi on March 25, 2022

Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha during the second part of Budget Session of Parliament, in New Delhi on March 25, 2022 | Photo Credit: PTI

Finance Minister Nirmala Sithararaman, responding to the debate on the Finance Bill, 2022, cleared by the Lok Sabha on Friday, blamed the Russia-Ukraine conflict for rising fuel prices and asserted that the government was committed to reducing the burden on the common man.

To counter Opposition criticism on high inflation and the lack of any tax relief for the middle class in the Budget for 2022-23, Ms. Sitharaman recalled a speech by India’s first Prime Minister Jawaharlal Nehru blaming the Korean war amid soaring food prices in 1951, and late PM Indira Gandhi’s decision to sharply raise income tax rates in 1970. Unlike many developed nations, India had not raised taxes to finance the pandemic spending and the economy’s recovery, she said.

The passage of the Bill, with 39 amendments including clarificatory points regarding the taxation of virtual digital assets and the disallowance of cess and surcharges as a business expense, paves the way for the government to implement the provisions of the Union Budget from April 1.

Noting that the Finance Bill highlights how the government, under the leadership of the Prime Minister, took a ‘conscious decision’ not to raise taxes during the pandemic or to finance the recovery from it. Citing an OECD report, Ms. Sitharaman said at least 32 countries, including Germany, France, the United Kingdom, Russia and Canada, increased various tax rates during the COVID-19 pandemic while India did not.

“The guidance I received while preparing last year’s Budget and this year was that we shall not take the taxation route. As a result, this Finance Bill has been received as one of the boring and insipid ones, with nothing great about it. But it is indeed, I would think, a Budget that did not burden the common man, yet put the money where the multiplier would be maximum and there would be infrastructure creation of assets with a big-time increase in spending,” she said.

On MPs’ comments about corporates getting lower tax rates, Ms. Sitharaman said the rate cuts announced in September 2019 actually helped the economy, the government and the companies.

“In the year 2018-19, our corporate tax collection was only about Rs. 6.6 lakh crore, then COVID happened… In spite of that reduction and the COVID impact, we have already collected corporate tax of Rs 7.3 lakh crore till yesterday, so the reduction in corporate tax has given us the rewards in spite of the intervening year being COVID-hit,” she explained, adding that improving corporate health could also lead to greater employment.

‘Govt. committed to lower common man’s burden’

Reacting to criticism about the fuel price hikes effected since this Tuesday, Ms. Sitharaman attributed to the global situation arising from the Russia-Ukraine war. “...It has nothing to do with the election time. If the oil marketing companies think that they are procuring on a 15 days average at a higher rate, obviously we will have to bear [it]. And this war that is happening in Ukraine, the impact of that is on all countries, supply chains are disrupted, particularly on crude oil and so on,” she explained.

“In 1951, Pandit Jawaharlal Nehru could say that a Korean war would affect Indian inflation… Korea and US could be used to justify price rise when India was not globally connected, but if genuinely today, we say the Ukraine war is causing the price rise, it’s not acceptable,” she said, terming this a ‘double standard’.

Recalling Mr. Nehru’s exact words from a speech, she said: ‘Prices keep going up, food prices rise, rationing and other steps had to be taken and you had to face difficulties. You complained and you must. We are in such a world that a war took place in Korea and prices of item go up here. If something happens in US, that affects prices here.’

“We as a government strongly believed in lowering prices, lessening the burden of the common man and we are continuously successfully doing it. Just to compare what prevailed earlier and today, on February 28, 1970, the Union Budget speech by Prime Minister Indira Gandhi who was also the Finance Minister at the time, had increased the marginal tax rate by 11 percentage points to 93.5% on all income over Rs 2 lakh,” she added.

“Today, if we do 1% TDS (Tax Deduction at Source) , we are being mocked and hit at. Now the highest tax slab for those earning over Rs 10 lakh is just 30%. Tax is a matter in which the Congress party never thought of reducing the common man's burden, whereas we are constantly working to make sure that people are not burdened, and we give them maximum benefit,” Ms. Sitharaman said.

“People who run businesses are treated with pride so that they can create jobs. We don't treat them as people from whom we have to suck out everything so that we have the vicarious pleasure of killing their entire business,” she underlined.

On Crypto Taxation

Reacting to MPs’ remarks that the government was conveying mixed signals about the regulation of virtual digital currency, Ms. Sitharaman said: “There is no confusing signal. We are very clear. There are consultations going on as to whether we should regulate it very much or a little or totally ban it. After the consultations will be concluded, the matter will come out. But till then, we are taxing it also because a lot of transactions are happening and this is commonplace knowledge based on members’ comments.”

Stressing that the TDS provisions for virtual digital assets did not constitute a new tax, she said it was useful for tracking purposes.

“(TDS) is one of the reasons that India’s tax base has been widening. We had about 5-odd crore taxpayers in 2014, which is now touching 9.1 crore because we are able to track the money trail of people who seem to be spending money but don’t pay when they are expected to pay taxes,” the minister said, noting that this also reflects the results of the battle against black money in the economy.

The discussion on the Bill took place by deferring the time usually allotted for private members’ bills in the House and Ms. Sitharaman explained that this was necessitated as this is the last week of March and ideally, ministries should be able to receive their funds by April 1 so that the planned spending can begin soon.

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